Professional indemnity insurance

Comprehensive professional indemnity cover for digital businesses

Professional indemnity insurance covers you if your client suffers a financial loss as a result of your work and takes legal action against you

Your knowledge and expertise are your business. It's what your clients pay for and what they rely on. They trust your advice to make big decisions. But if the big decision goes wrong, you could have a big problem. Hero to villain in one fell swoop. If that happens, professional indemnity insurance can save the day.

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Do I need professional indemnity insurance?

Everything you need to know about professional indemnity insurance

Define professional indemnity insurance?

Even the most experienced advisors can end up making a mistake, and when there's money and reputations involved, things can get nasty. Professional indemnity cover is for situations where a client suffers (or claims to have suffered) financial loss as a result of your advice or service – even if you weren't at fault. It will cover any legal costs for fighting your case, plus any resulting compensation, as well as supporting with reputational and financial damage to your own business. Not to be confused with public liability insurance, which covers you against accidents, injury or property damage to a member of the public, professional advisors and services must also consider PI insurance, otherwise known as indemnity insurance, meaning you're covered for financial and reputational damage caused.

Who is it for

Professional indemnity insurance (PI) is designed for businesses that offer a professional service, advice or consultancy - including small businesses. That includes software developers, IT consultants, financial advisors, PR consultants and designers. Any business where you're selling your knowledge and expertise, or handling data or intellectual property on behalf of clients, PI offers valuable cover if anything goes wrong. Plus, many of your clients are likely to ask for PI as a condition of working with them. So, as with some other business insurance policies, it could even help you close the deal!

What are the risks

However careful and dedicated you are, there are some days when the world conspires against you, resulting in mistakes or errors in your work. Client relationships can lose their shine without warning, projects can go pear-shaped and, even if you've done nothing wrong, you can face claims of breach of contract or professional negligence - particularly if the client loses money as a result.

If you're a software developer, you could be held liable if the software you've built falls over a few months later. Or as a communications consultant, you could accidentally leak confidential information. Either way, if your actions lead to reputational or financial damage to the client, you'll not only have legal costs to pay, but potentially compensation and loss of earnings on top. Professional indemnity insurance can cover these risks, helping your business stay above water.

Things you can do

Nobody wants to face a PI claim, so there are various risk management practices that will reduce your exposure. First off, invest in a lawyer to draw up watertight contracts and T&Cs for your client work, so both parties are clear on their professional duty, the scope of the work agreed, and any stipulations regarding what you can and can't be held liable for. This should be supported by thorough internal checks and procedures to ensure you are consistently meeting your responsibilities and maintaining a high quality of work. And if you subcontract work, it is vital that your suppliers are also held accountable, through a contractual agreement, and a requirement to have PI. That way, if they make a mistake, you have the option to hold them liable if necessary.

Things to watch out for

There are two different types of indemnity cover. The first is negligence-based and relevant to more traditional professions, such as solicitors or accountants. The second covers civil liability and a much broader scope of risks. For media, tech and other service businesses, the second option is most likely the right one. Make sure you declare exactly what your business does to your insurer, as this will influence the specific policy details that you need. And be vigilant about updating them if anything changes, so your business insurance can be revised to reflect this. If you're unsure about what level of cover you need, think about the worst possible scenario that could occur in the course of your work and the financial impact that would have. Your clients or industry body may specify a limit so check that, while also taking into account the potential cost of your own legal fees on top and the possibility of facing multiple claims at once. Before purchasing, also check that your policy will cover you for liquidated damages, i.e. penalties specified in a client contract. So if you're found in breach of an agreement – to deliver the project by a certain deadline, for example – you won't need to foot the bill. Another aspect to consider is where your clients are based. If they are abroad – particularly the US or Canada – you might need a more specialist cover, so check this before choosing a policy. And if you operate in the financial, medical or legal services sector, you should seek out specialist advice as you may require more tailored cover. And finally, if disaster does strike, make sure that you notify your insurer as soon as possible after you become aware of a possible issue that might lead to a claim. This is often specified within the policy wording and if you don't, again you won't be covered.

Who needs professional indemnity insurance?

Businesses that provide advice, consultancy, or offer a professional service should consider Professional Indemnity (PI) insurance. If you handle data or intellectual property belonging to your clients, it's often a contractual requirement. Learn more.

Why professional indemnity insurance?

Cover against mistakes

We all make mistakes from time to time - that's just life. But when you or your employees give bad advice or make a mistake it can end up costing your client, and you, big time! Professional Indemnity (PI) will cover you for the costs arising from negligence claims made against you.

Protect your reputation

For most of us, reputation is a key element of ongoing success. Our cover provides public relationship and crisis management, to help protect your brand and reputation when things go wrong.

Intellectual property infringement

With today's rate of content creation, your chances of accidentally breaching copyright and intellectual property (IP) are increasing. With our cover, you're not only covered for your mistakes, but we'll pay up to £25,000 in legal costs defending your business from others.

Find out more about professional indemnity insurance.

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