Dealing with difficult customers and complaints is one of the hardest things any self-employed person or manager will encounter.
No matter how good you are, when a customer is difficult, or has a legitimate complaint, it can put your reputation at risk simply because bad word spreads, and that can have a significant impact on your opportunities and your income.
Most trades professionals will have had to deal with unsatisfied customers. Unfortunately, some unsatisfied customers choose to take their complaints further and pursue legal action – especially if they feel they’ve experienced a financial loss because they followed your advice, or because they used your services. Tradesman professional indemnity insurance is specifically written to provide cover for negligence claims such as these, which will give you peace of mind just in case you do have to deal with a disgruntled client.
Tradesman public liability insurance is a great way of protecting your business’ finances and is arguably the most common type of cover held by trades professionals. It’s a vital form of cover for any business that deals with customers as it also protects members of the public, but it has been created to cover liability claims, not for claims of negligence, bad advice and poor quality work.
PI is also a great way to protect your business financially, but will also provide cover for alleged poor advice, negligence, and for issues with designs that affect your clients and cause them a financial loss.
You don’t have to be an architect or designer to benefit from PI insurance. If you’re in the trade and misinterpret designs when it comes to fitting plumbing and heating, or rewiring buildings for example, then you could be held liable for any financial loss suffered by the client.
Construction contractors are a key beneficiary of construction professional indemnity insurance as it can be a prerequisite for tenders, as well as for the protection it provides for construction designs.
PI will also provide cover for other issues that could be potentially damaging to your business.
If you ‘bad mouth’ and competitor or a main contractor you’re working for or have worked for in the past, then you could find yourself on the receiving end of legal action for defamation of character.
If you are subcontracting for a main contractor and renege on part of your contractual obligations, you could be liable for a breach of contract claim.
Another area that PI offers cover for is breach of confidential information. For example, if you store sensitive data on your computer or mobile phone about a project you’re working on, or details about client bank details and personal addresses and contact details. Unintentional sharing of this kind of information can happen due to human error and can result in, at least spam emails and unwanted telephone calls, at worst it could be the doorway for a cyber-attack on one or more individuals and result in financial loss.
Separating yourself and your personal assets from your business by setting up as a limited company can limit your risk exposure to liabilities claims. Although you can, as a limited company director, still be pursued personally by a claimant, even if they have made an unsuccessful claim against your limited company. You’d benefit from directors and officers insurance in this instance.
Setting up as a limited company isn’t for everyone, as 3.2 million UK sole traders (1) well attest to.
What is important to know is that professional indemnity insurance will provide cover for you in the event of a claim. The best way to know if you need PI as a sole trader is to ask yourself if you could afford to pay legal fees and a compensation claim out of your own pocket?
If not, then PI will give you the peace of mind that you’re covered should the worst happen, and a claim be made against you.
PI insurance offers cover for more scenarios than you might expect, including: