Professional Indemnity Insurance
If your business involves selling your knowledge or skills, you should consider professional
indemnity (PI) insurance. A PI policy covers areas such as libel, slander, professional neglect,
malicious falsehood, passing off copyrights, breach of confidentiality, negligent statement or
actions, error and omissions for principals and their employees.
What you will be covered for
This protects your business against compensation sought by a client if you have made mistakes or
are found to have been negligent in some or all of the services that you provide for them.
Professional indemnity insurance will also cover any legal costs. Most professionals carry
professional indemnity cover. If you are a lawyer, accountant or financial adviser, then you must
have professional indemnity insurance. Professionals such as architects, consultants, advertising
and PR agencies, and designers often opt for such cover as well.
Ensure you are properly covered
One important aspect to bear in mind when considering professional indemnity insurance is that
you need to be covered both at the time of the event and when the claim is made. This is because there
can often be a long delay between an event and a subsequent claim. So, if you plan to cancel your
policy when you close your business or retire, you may need to arrange "run-off" cover for a period of
time afterwards. Also, if you plan to change insurers, you will either need to arrange run-off cover
or get agreement from your new insurer to accept new claims for prior incidents.
Keep everything well documented
One way to minimise such claims is to make sure projects are well documented. Ensure that you set
out specific responsibilities in your contracts with clients beforehand and deal with complaints
promptly. As this is a specialist area of insurance you should take advice from a suitably experienced
insurance broker such as Campton Insurance Brokers (UK) Ltd.