Do You Need Professional Indemnity Insurance?

In an unpredictable world, advising or consulting can be a tough business. Clients are depending on you to give good advice. A lapse in judgment, an error, or an unforeseen variable can quickly ruin your relationship with a client. In such a competitive and volatile environment, when a client brings a claim against your firm, you need adequate insurance coverage. That’s where indemnity insurance comes in.

What is Professional Indemnity?

Indemnity insurance, also known as Professional Indemnity insurance or PI insurance, is designed to help protect against claims brought against you from a client. These could stem from an error in the work you’ve done for the client, poor advice generating from your firm or general negligence on your part. Even if your firm has years of experience, sometimes things slip through the cracks. You could have had a good relationship with your client for several years but one wrong turn could change the dynamics in a moment. Indemnity provides for compensation payable to your client which will cover the costs to correct the mistake. In addition, legal costs and expenses in defending the claim will be covered.

What Industries Need Professional Indemnity Insurance?

Several industries are required to have professional indemnity insurance. For instance accounting, engineering, and surveying are industries which need indemnity insurance. Other industries like business or management consultants, financial advisers and IT experts will likely need indemnity as well. Several other industries would be well advised to add indemnity insurance. Fitness professionals, dance instructors, tutors, and designers are all examples of professionals who would benefit from indemnity insurance.

How Much Indemnity Insurance Do You Need?

Choosing a professional indemnity insurance limit depends on your firm’s circumstances. If you need PI insurance for a specific contract, it’s likely the client will have specified a minimum amount. This is often the case for industry bodies too, so check before arranging cover.

When in doubt, consider the worst case scenario if you were to make a mistake in a piece of work for a client, and estimate the cost of putting it right. Remember to take into consideration any legal fees and losses that could be incurred by your client as a result of the error.

Safeguard Against Error

Indemnity insurance is vital to many companies, if you can avoid needing it, you will be better off. While every business owner is aware of the importance of getting things right, it’s a good idea to check on your employees regularly to ensure they are meeting regulations. Some small errors which are avoidable could expose you to a claim. A loss of client documents or data, and unintentional breach of copyright and/or confidentiality or defamation and libel of clients are all cause for a claim. Most employees likely understand the importance of preventing each of those scenarios, however, any training or preventative measures to reinforce this is worth the investment.

If you’re considering purchasing professional indemnity insurance to help protect your firm, contact the experts at the H&K Insurance Agency in Watertown, MA. Our team would love to review your coverage and help determine the level of protection your firm will need.