A Guide to Professional Indemnity Insurance

Nobody wants to make a mistake at work, not least a mistake that could cost their clients and their own business. But, mistakes can and do happen which makes it more important for businesses of any size to protect themselves from allegations of professional negligence, as well as allegations of breaching a contract. That’s where professional indemnity insurance can be so critical.

This guide will help you understand what professional indemnity insurance is, what it covers, and why your business might need it.

Professional indemnity insurance provides insurance protection if a client alleges that your business provided advice that has led the client to lose money, or of making a mistake in the work you’ve been doing for them. It also covers businesses for an alleged breach of contract, as well as defamation or libel, and breach of confidentiality such as inadvertently releasing confidential client information.

In the event your business faces a legal claim related to the areas covered above, professional indemnity insurance will fund the legal costs, as well as any damages or compensation agreed with your client.

A professional indemnity insurance claim will generally involve a client alleging that the advice they have been given by your business has led to a loss. It could, for example, be a firm of solicitors carrying out the conveyancing for a homebuyer and failing to notice that the building being bought did not have planning permission for an extension built which later led to the homeowner having to take expensive, corrective action.

Other examples could be an accountancy firm making a mistake in a client’s end of year accounts, or a marketing agency using an unlicensed image for a client’s advertising campaign and the client suffering a copyright claim.

While professional indemnity insurance protects your business against claims made by a client for professional negligence, public liability insurance provides cover for risks of injury or damage to a third party such as a client or a member of the public. Public liability insurance is more focused on the operational side of a business. If a client came to your office and tripped over a loose computer cable and injured themselves, public liability insurance would meet the costs of any potential claim.

You can go to professional indemnity insurance to get a quote for your business.