Professional Indemnity Insurance
Sometimes things go wrong in business, and that’s normal, but you need reliable professional indemnity insurance to help soften the blow.
Why choose Howden for Professional Indemnity Insurance?
As a broker which specialises in business insurance, we pride ourselves on doing the heavy lifting, so you don’t have to. Thanks to the great relationships we have with our selected panel of standard and specialist insurers, we make the process of comparing multiple professional indemnity insurance policies, on your behalf, simple and easy. What’s not to like?
Here at Howden, we recognise that each professional indemnity policy needs to be as individual as its owner and their business, and that’s why we provide a tailored, personalised service, which is focused on getting to know you and learning more about exactly what you want from your business insurance.
Ultimately though, whether you need to make a claim, purchase a new business policy, or renew an existing one, just know that we’re here to help.
Benefits of working with Howden:
- You can trust us – we’re rated Excellent on Trustpilot.
- We’re driven to save you time, money, and hassle.
- Benefit from a tailored service that comparison sites can’t provide.
- Speak with your local branch, within your community.
- We’re right by your side in the event of a claim.
What is Professional Indemnity Insurance?
Professional indemnity insurance - also known as P.I or professional liability insurance - is an insurance policy that is designed to protect business owners, the self-employed, and freelance workers against financial reimbursement claims by clients who believe the service to be inadequate. Clients might argue that the poor service they received was a result of negligent acts, errors, or omissions.
Any individual or organisation that provides a professional service is liable to be sued if the client is unhappy with their work, so although professional indemnity insurance is not a legal obligation, it’s recommended that you have it to avoid being left vulnerable following mistakes.
But what exactly can professional indemnity insurance cover you and your business for? Other than providing millions (sometimes even billions) of pounds worth of cover for legal fees and compensation costs, these policies will also generally provide cover for:
Bodily injury
If an injury is caused to a third party by your negligence while performing your professional duties, then professional indemnity insurance covers financial loss, personal injury, and property damage resulting from your negligence.
Consequential loss
Most professional indemnity insurance policies cover consequential financial loss by your client or customer that is due to your mistake or negligence. Check with your provider beforehand, as not all policies include this cover.
Defamation
Defamation is anything written or spoken that is harmful to someone's reputation and can be proven to be false, and this is usually covered when it’s unintentional.
Confidentiality breaches
Cover for breaches of confidentiality and the subsequent legal proceedings.
Intellectual property
If another business claims that your work is too similar to theirs, professional indemnity insurance can cover you if they opt to take their claims to court.
It’s worth nothing that professional indemnity insurance is almost always written on a Claims Made basis, meaning that cover is triggered when a claim is made against the policyholder during the policy period, regardless of when the wrongful act that gave rise to the claim took place, subject to the retroactive date.
Terms and conditions of professional indemnity policies can vary per insurer though, and we would be happy to provide some guidance around how this type of business cover works, and what policies would work best for you.
So, how do you get started? All you have to do is get in touch with us, and we can start compiling information you provide us about your business, before helping you find a professional indemnity insurance policy that you can be proud of.
More about Professional Indemnity Insurance
Who needs professional indemnity insurance?
Although most professionals are advised to get professional indemnity insurance, there are some industries and sectors that are more likely to need it than others.
Professional indemnity insurance should be a priority if:
- You or your business provides direct professional services, advice, or consultancy to clients.
- Your business is liable for disputes over the quality of service.
- Your business is liable for disputes over copyright issues.
- Your business is open to claims of professional negligence.
- You or your business have access to confidential information.
Some industries, such as accounting, consultancy, surveying, engineering, and healthcare, often need professional indemnity insurance due to the requirements of their professional bodies.
Is professional indemnity insurance a legal requirement?
Professional indemnity insurance is not a legal requirement in the UK. The only insurance that some businesses are legally required to have is employers liability insurance, which is relevant for all businesses that hire one or more employees.
Although professional indemnity insurance is not a legal requirement, it’s highly recommended that you get a policy if your line of work is likely to be sued for negligent services.
How much does professional indemnity insurance cost?
The overall cost of professional indemnity insurance will depend on a variety of factors, including your excess, claim limit, claim history, industry, size of business, the equipment necessary for your work, and your location, amongst other factors.
Some policies start at under £10 per month, while others are in the thousands. As we saw already, there are some professional indemnity claims for big companies that reach billions of pounds, so it’s understandable that there is a wide range of prices for different levels of cover.
Before making a decision on professional indemnity insurance, be sure to approach a number of providers so that you can compare quotes before making a decision. The best way to do this is to approach an insurance broker who can find tailored policies to suit your specific requirements.
What level of cover do I need?
The level of professional indemnity cover you need depends largely on your line of work and the clients you engage with. For example, if you work in a heavily regulated industry, then you should opt for more professional indemnity cover.
When choosing the level of cover you need, consider a worst-case scenario, including legal fees and compensation payments, and then opt for whatever amount would cover that bill. Although this is (hopefully) unlikely to happen, it’s always best to be covered for the worst possible situation so you can rest assured knowing you’ll survive such a scenario.
You should also consider your cash flow and staffing capacities. Are both sufficient to rectify major errors? If not, then you should opt for more professional indemnity cover.
You can also ask your clients directly how much compensation they would expect. Though you should be careful apart putting this into a contract as breaches of contract are usually not covered by professional indemnity insurance.
Most insurers should let you build your own policy to suit the specific requirements of your business. It’s important that you are honest and transparent with your provider so that you can find the exact level of cover that you need.
What is the difference between professional indemnity and public liability insurance?
Public liability insurance covers businesses against claims made by members of the public due to injury, illness, or damage as a result of that business' work.
Professional indemnity insurance covers claims made by clients for professional mistakes or negligence. It doesn’t cover claims made by members of the public.
Some businesses might opt for both professional indemnity and public liability cover, though neither is a legal requirement.
What is the difference between professional indemnity insurance and employers' liability cover?
Employers' liability cover is a legal obligation for any business that employs one or more members of staff, even if it’s only on a casual basis. Employers' liability cover insures both employees and employers against any accidents or injury that may be caused as a result of the workplace conditions.
So employer liability insurance is for claims of negligence that are made within a business, whereas professional indemnity is for claims of negligence made by clients outside of the business.
Moreover, as we have already seen, professional indemnity insurance is not a legal obligation, but employers' liability is.
What is the difference between professional indemnity insurance and product liability cover?
Product liability cover protects you against the cost of personal injury, damage, or illness caused by your product. It’s usually required due to the result of a faulty product.
This differs from professional indemnity insurance as it covers damages caused by the product rather than negligence or mistakes in the professional work itself.
How to reduce the cost of your professional indemnity insurance
Reducing the cost of your professional indemnity insurance is trickier than it’s for other types of insurance, but there are still a number of things you can do to bring the price down.
Make a good first impression
When you fill in your initial proposal form, it will be reviewed by an underwriter, and they’ll also assess your business' wider profile. Make sure that your website is up to date and well maintained and that any business finances that are available online are in order. Also, be sure to complete the proposal form accurately as these small differences can all make a wider impression.
Raise your excess
Every insurance policy comes with an excess, which is the amount that you’ll pay before making a claim from your insurance provider. If you voluntarily raise your excess, the cost of your premium will reduce. However, make sure that you are able to afford the new excess rate before setting it too high.
Detail any risk management strategies you have in place
If you have risk management strategies in place and you spend time and money on ensuring the quality of your business' output, then make sure your insurance provider is aware of this.
If you don't yet have any risk management strategies in place, then consider starting some. This might include employee training, regular feedback from clients, or employing a third party adjudicator. Be sure to tell your insurer as soon as you have set up any new strategies.
Get the right level of cover
Although there are greater perils to being underinsured, many businesses find that they’re over insured beyond their necessary requirements.
Make sure you find a policy that is tailored to the specific needs of your business and that you review your cover every year so that you can adjust your levels as necessary.
Meet your provider
You’ll have an underwriter working for your insurance provider who looks after your business. Building up good relationships over time with these people can be a good way to make sure they trust you and your business and offer better deals based on that rapport.
Shop around
There are countless insurers out there who offer professional indemnity insurance. Be sure to shop around and get multiple quotes before making any decisions. You could also work with a broker to try and get the best deals as they may have built up long-standing relationships with insurers meaning they can help find great policies that are tailored to your specific needs.
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It’s essential that you and your business are ready when the unexpected happens. Look no further than Howden’s employers’ liability insurance.
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