Professional indemnity insurance can be a vital line of defence for all business owners. Whether you’re an independent contractor, a freelancer, a sole-trader, or the managing director of a small business, you should consider getting professional indemnity insurance cover. It affords essential protection no matter what industry you work in.
Specialist Industry Guides to Professional Indemnity Insurance
In this post we’ll explore what professional indemnity insurance is, and why you need it. But if you’re working in a specific industry, be sure to read one of our specialist guides:
- Medical practitioners.
- Engineers.
- Graphic designers.
- IT consultants.
- Tradespeople – including builders, interior designers, painter decorators, and plasterers.
- Freelancers.
- Massage therapists.
What is Professional Indemnity Insurance?
If your business is focused on offering advice, consultations, or any number of professional services, professional indemnity insurance can cover you for claims of:
- Negligence.
- Dishonesty.
- Defamation.
- Intellectual property infringement.
- Information and privacy liability.
- Cyber liability.
These might all seem like far-fetched scenarios. You’re an honest professional, and you’re committed to doing the best for your clients and customers. So why would any client ever make a claim against you for, say, defamation? Or intellectual property infringement?
Why Would a Client Make a Claim Against You?
Think of it this way – we all make mistakes. And if you provide most kinds of professional services, making a mistake in your work could cost your clients some money. Your mistake could even affect your client’s reputation, which could in turn affect their future income.
If your client alleges you’ve made a mistake, and that they’ve suffered a loss as a result, they may make a claim against you. And if they do, you could end up in court.
Obviously, nobody wants to be in such a nightmare situation. But these things happen. And when they do, professional indemnity insurance can cover all of your legal costs, as well as any financial compensation your client may be due.
Common Professional Indemnity Claims
Still can’t imagine why you’d ever need professional indemnity insurance? The risks you face will depend on the nature of your work, but here are some common scenarios that could result in a professional indemnity insurance claim:
- You accidentally CC another client or contact into a confidential email. The client considers this to be a breach of confidentiality.
- When working on a client’s computer, their system gets infected by malware, resulting in a cyberbreach and significant data loss.
- You receive some confidential information from a client, but then your system gets hacked, or your device is lost or stolen. The client’s valuable and confidential information is now compromised.
- You provide marketing or financial advice, which your client follows. But your advice does not pay off, and actually results in your client making a loss.
- You discuss a client’s design needs and agree to a brief. But once you’ve finished your work, your client insists that it does not match the original brief.
- Another company claims that the logo you’ve designed for your client infringes on their copyright.
In each of these cases, the client could make a claim against you, alleging that they suffered a loss as a result of using your services. And in each case, professional indemnity insurance would cover all of your legal expenses, along with any financial compensation for your client.
Is Professional Indemnity Insurance Required By Law?
You do not have any legal obligations to get professional indemnity insurance. However, some clients will refuse to work with you unless you have sufficient cover in place.
This is particularly true of larger clients, who may have more to lose in terms of both money and reputation. Before they sign a contract with you, they may ask for evidence that you have a professional indemnity insurance policy. This is for peace of mind that both you and they will be covered should anything go wrong over the course of your working relationship.
So while there’s no law saying that you need professional indemnity insurance cover, if you don’t get it, it could severely limit the sorts of clients you can work with, and the scope of work you can provide.
How Much Professional Indemnity Insurance Do I Need?
When you take out a professional indemnity insurance policy, you need to specify a limit of liability. This is the maximum amount your insurer will pay out in the event of a claim.
The higher you set your liability limit, the more you’ll need to pay for cover. But if you set your liability limit too low, you may have to cover significant expenses yourself should you ever have to make a claim on your policy.
Read our full guide to how much professional indemnity insurance you need.
Comprehensive Professional Indemnity Insurance For Businesses of All Sizes
At Tapoly, we offer flexible professional indemnity insurance policies that you can adjust according to the needs of each individual job. We offer up to £2 million of professional indemnity cover, but you can always lower your limit if you need to. Get covered with us and you’ll never pay for more than you need.
We offer professional indemnity insurance as a flexible and affordable add-on to our freelance and contractor insurance policies. Head here for more information, and to get a free quote in minutes.
If you have any questions, or you’d like to discuss your options, you can contact the Tapoly team at info@tapoly.com, call our info line on +44(0)207 846 0180, or use the chat box on our website.