Professional Indemnity Insurance (PI) that protects you and your business
Professional Indemnity Insurance (also known as PI insurance or professional liability insurance) is a type of business insurance that protects you if you make a mistake in work you produce for a client, or if you provide advice to your client that causes them a financial loss.
It also covers legal costs and expenses in defending a claim as well as compensation payable to your client for loss or damages.
All businesses that provides a professional service to clients should consider carrying professional indemnity cover for peace of mind that you are covered in case any mistakes, errors and omissions occur.
Getting professional indemnity insurance cover is quick and simple, with the option to pay monthly and spread the cost over the lifetime of the annual policy.
Get in touch with the Caunce O’Hara team to discuss the right level of cover for your needs on 0333 321 1403.
What insurance cover does professional indemnity provide?
PI insurance can cover you for mistakes including professional negligence, unintentional breaches of copyright or confidentiality, Data Protection Legislation Prosecution defence costs and loss or damaged documents.
PI insurance covers the costs of legal fees and compensation claims if a client takes legal action against you.
If you offer professional advice, services or designs that are incorrect or negligent and your client suffers a financial loss, they can make a claim against you. PI insurance will cover you in this instance.
For professionals offering advice and services in the UK, it is an essential type of insurance.
If you make an error in your work or leave out something essential, you won’t be liable for the legal costs of putting it right.
Which professionals need PI insurance?
Many professionals will need this type of insurance in order to join their respective professional bodies. Some clients may demand that their freelancers and contractors have PI insurance to cover the value of your work.
You could be liable for thousands of pounds if you offer advice or a service which leads to your client losing money.
If you undertake any of the following business activities, you should consider carrying professional indemnity insurance;
- Offering advice or professional services to clients as a contractor or consultant
- Providing designs as an architect or engineer
- If a client requests that you take our professional liability insurance.
- Part of an industry regulator or professional body that requires insurance coverage to be a member.
PI insurance benefits a wide range of professions including:
- Creative/ New Media
- Construction Contractors
- Energy Contractors
- Finance Consultants
- IT Contractors
- Legal Professionals
- Management Consultants
- Social Workers
- Health and Wellbeing Professionals
If your work brings you into contact with members of the public, then public liability insurance can be combined via Caunce O’Hara’s Business Combined liability policy, which will complement your PI cover.
Is PI cover a legal requirement?
PI Insurance is not required by law. However, a wide range of professional and regulatory bodies do require its members to carry professional indemnity insurance.
Legal professionals, financial advisers, accountants, certain healthcare professionals and architects may be required to carry indemnity insurance to be a member of their regulatory or professional body.
Even if it isn’t a legal requirement, many businesses, freelancers and contractors can benefit from the protection it offers.
What is the difference between public liability cover and professional indemnity insurance?
Both types of insurance are useful for business owners, however, they offer different types of coverage so it’s important to understand the difference.
While professional indemnity insurance covers you for negligence in the work you do, public liability covers you in the event a member of the public is injured or their property is damaged.
Some businesses only need one type of coverage because of the nature of their work, while others will need both.
If you’re unsure about the difference between public liability and professional indemnity insurance, get in touch with our team on 0333 321 1403
What are the different types of professional indemnity cover?
Two ways PI insurance policies are written;
- Claims made coverage. You are covered for any claims made for the duration of your coverage, regardless of when the incident actually occurred.
- Claims occurring coverage. This will only cover you for work done during the insurance coverage period. Therefore, it is important to understand the terms of your agreement. Our team can help to talk you through the policy options in plain English so you won’t be left in the dark.
How does PI insurance work?
It is important to choose a policy that suits your individual business and industry.
For example, cover for designs will be relevant to an architect, but not to a solicitors practice. Therefore, ensuring that your insurance policy reflects your business needs is essential.
Professional Indemnity insurance is written on a claims made basis. That means that you must a professional indemnity insurance policy in place, at the time a claim is made against you, to ensure you are covered.
Most policies work on a 12-month basis and you will pay a monthly premium for your cover based on the excess. Excess is the initial part of the claim that is not covered that the insured will have to pay for.
As a rule, the higher your excess, the lower your monthly premium. Likewise, if you choose a low excess, you can expect to pay a higher monthly premium.
How much does indemnity insurance cost?
You can get comprehensive coverage from as little as £98.00 a year. Your premium will depend on the amount of cover you need, the risks of your profession and the excess amount.
What level of professional indemnity cover do I need?
The level of PI cover you need will depend on the value of the work that you do and the potential liability. We can help you build the ideal insurance policy that will protect all areas of your business.
What is Retroactive Cover and do I need it?
Retroactive Cover ensures that the policy you purchase is covering you for all the past work your business has undertaken, providing you are not aware of any issues with your work that could lead to a claim being made against you. Uninterrupted cover must also have been in place to this point.
Freelancers and contractors will often swap insurance providers during their careers. Extending cover to include retroactive insurance provides peace of mind that any past work is covered.
Does my PI policy cover any substitute I send in my place?
This depends on your PI policy. Some policies include this as standard, others do not, so it is important to check this with your insurance broker.
Can I cancel my policy when my contract finishes?
Cancelling your PI insurance when your contract ends puts you/your company in the position of being uninsured when a claim is made.
A Professional Indemnity insurance policy is written on a ‘claims made’ basis.
This means it pays out for a claim made during the policy period, meaning you need to have the insurance in place when you receive notification of the claim being made against you.
What can I do to minimise my chances of a claim being made against me?
There are a number of ways you can work towards ensuring a potentially claim-free career;
- Get sign-off for each milestone stage of every project you work on.
- Be certain you can deliver the work required of a project before you sign a contract.
- Read and understand all of your contracts in full. Get legal advice with this if needs be and retain copies of all documents.
- Ensure you carry an active policy. Do not leave yourself uninsured.
Do I need PI insurance if I close my business?
Professional Indemnity Run Off cover provides you with insurance after your business has ceased trading. It is important to be aware that even though your business is no longer trading you can still be subject to a claim made against you. This can be for up to 6 years after your business closed. See below for details of ‘claims in relation to’ for timescales.
Run Off is a particularly important insurance for people entering retirement. The cover is usually a fraction of the premium of full PI insurance and in some cases the premium will decrease year on year.
The relevant limitation periods for different types of claims set out in the Limitation Act of 1980 are as follows:
Professional Indemnity insurance claims in relation to:
- recovery of land: 12 years
- a contract: 6 years
- awards in arbitration: 6 years
- debt arising under statute: 6 years
- negligence: 6 years
- breach of trust: 6 years
- tort: 6 years
- personal injury: 3 years
- defamation and malicious falsehood: 1 year
To discuss PI Run Off cover call us on 0333 321 1403
If you would like to speak to one of our expert team about professional indemnity insurance for your business, please call 0333 321 1403 today.