4 Essentials on Professional Indemnity Insurance Cover
Learn about for whom professional indemnity insurance cover is for and when you might need it.
This article aims to provide insight on professional indemnity insurance cover, in terms of who needs it and what benefits cover provides.
Professional indemnity insurance can be useful for a range of industries. In fact, certain trade bodies require it. So what are the essential things you need to know about professional indemnity? In this article we provide 4 considerations for your insurance cover:
1. When you might need professional indemnity cover
Let’s look at the kind of situation in which you would save you money and credibility. For example, an accountant holds a huge amount of data on their clients. If this data is lost, either because a laptop was left behind on a train, or if data was emailed to the wrong person, it could cost your client money. Were they to sue you for this loss, professional indemnity would cover the costs associated with the case.
This is the type of potential breech of duty that professional indemnity insures against, but it’s not just to do with data. Indemnity insurance also covers the costs of bad advice, negligence, intellectual property infringement, defamation or dishonesty.
2. What industries need professional indemnity cover
Here are some of the businesses that can benefit from professional indemnity:
- Any business providing advice, including accountants, financial advisors and engineers
- Businesses that deal with the intellectual property of their clients, including marketing and media professionals, website designers, SEO professionals and contractors.
- Companies who handle client data, particularly large amounts of it, such as web hosting companies, consultants and analysts
In other words, anyone who deals in advice, intellectual property, or data should consider cover.
3. Which trade bodies require professional indemnity cover
There are a number of professional bodies that require their members to have professional indemnity. For those not a part of these trades, it can help to illustrate what the cover offers.
- Accountants must be covered because of risks around advice and data
- The architect’s code requires it due to potential delays to projects the complicated nature of their work may cause
Although this list isn’t exhaustive, it gives you a sense of the kinds of claims it’s considered essential to cover.
4. What your clients and data mean for professional indemnity insurance
For most businesses, the types or nature of clients they have will affect the level of cover they need.
- The types of project you deal with are important. If you’re liable for the cost of something being delayed or even replaced, how much could it cost you?
- The size of your clients is an essential consideration. Professional indemnity covers against the losses due to a mistake, so the bigger the business, the bigger their potential losses
- Local Authority council’s might insist you have a policy in place with a minimum level of cover before doing any work for them.
- Finally, the overall value of the work is important. That’s not just your part of a contract—if faulty work delays an entire project, you may be liable for the entire loss.
Professional indemnity insurance cover isn’t just for larger businesses. Make sure you’re also protecting your own assets as a small company.