If you work as a consultant or offer advice or expertise to other businesses or individuals then it is advisable to buy a professional indemnity cover for your business. It protects you in case the client considers you responsible for negligent and may blame you for loss of their time and money. If you handle some data or intellectual property of the client then this insurance helps if the client makes a claim on you.
In such cases, if you are not insured then the amount of compensation money that is payable to the client may bring down any business to ashes. Depending on the claim, the compensation money would suffice loss of earnings, future loss of earnings and the cost of repairing damage. Along with this, you may be subjected to pay other damages as well as legal costs if any.
Professional indemnity cover is beneficial for the following risks:
Loss of data
Loss of documents
Negligence of any kind
Violation of intellectual property rights
Dishonesty of any kind
Remember that the risks are not just limited to above mentioned points and can be many as per the business and the circumstances. So, better read the small print to check if you are covered for all kinds of risks or not.
Who needs professional indemnity insurance cover?
Following professions are advised to have a PI cover:
Advertising and media professionals
How much PI cover do I need?
The amount of cover solely depends on the risk involved and the type of business. However, experts suggest a minimum cover of £2m which can be extended up to £10m. The cover may vary if you need to meet the guidelines suggested by external regulators. So, ask your insurance provider about all the details and then only sign any policy document.
Premium of a PI cover depends on the following factors:
Type of business
Number of employees
Based on the above factors, risk benefit analysis is made by the insurer so as to decide a premium amount that covers the cost of risk.
To get the cheapest PI cover possible, you should combine it with employer’s liability or public liability cover. One joint policy will give lower premiums than two or three separate policies. To get the right policy, just shop around and compare all the business insurance providers across the UK.