Professional indemnity insurance is an important consideration for all businesses, especially for those that give advice or provide a professional service to clients. It can cover compensation claims if a business is sued by a client for making a mistake that leads to financial loss. Insurers are facing millions of pounds worth of professional indemnity claims arising from negligent financial advice given to those transferring out of the British Steel Pensions Scheme last year.
Why do you need professional indemnity insurance?
There are a number of claims that could be brought against a professional.
- Negligence
- These claims centre on being careless in your work, such as giving bad advice or making a mistake that causes damage to your client’s business.
- Infringement of intellectual property rights.
- For example, taking content from a website without permission or using an image without the correct accreditation.
- Defamation
- Defamation claims are brought if someone feels you have been making false or damaging claims about a person or organisation.
- Breach of confidence
- Sharing confidential or commercially sensitive information without consent can bring about a breach of confidence claim.
Who needs professional indemnity insurance?
When you’re deciding whether your business needs professional indemnity insurance, first check whether your regulator or professional body requires you to hold a policy. If you work in accountancy, architecture or chartered surveying, it’s likely that you’re obliged to have professional indemnity insurance. The Architects Registration Board recommends that the minimum limit of indemnity should be £250,000 for each and every claim.
You may also find that your client contracts require you to have a particular level of professional indemnity insurance. Even if this isn’t the case, you may still decide that your business needs professional indemnity cover. This can reassure potential clients and give you peace of mind and security. You should consider how much legal fees and compensation could cost you if something went wrong.
It’s a particularly popular insurance for businesses that give advice, provide a professional service, or handle client data and intellectual property. Perhaps you accidentally mishandle data or you’ve given the wrong advice which leaves you open to a claim. As a result, policies are taken out by a wide range of professions, from IT consultants and engineers to healthcare professionals and consultants. The number of professional negligence claims against solicitors and barristers in the high court rose 170% from 2012 to 2016.
Anyone who provides a professional service and could have claims brought against them by a client. This includes sole traders, freelancers and contractors, along with limited companies and limited liability partnerships. To find the best professional indemnity cover for the best possible price, contact John Morgan Partnership today.