What is professional indemnity insurance?
Professional indemnity insurance, also referred to as PI insurance, is a type of business insurance that covers you for costs if you make a mistake in a piece of work for a client that causes them financial or reputational loss.
Do I need professional indemnity insurance?
From consultants and accountants, to designers and recruiters, professional indemnity insurance is important for many business types. It might be needed by a self-employed person like a consultant or an accountant, or by a company doing certain types of work.
What does professional indemnity insurance cover?
If you give incorrect advice or make a mistake
If you produce or support libel statements about your client
Breach of confidence
If you share sensitive information without permission
Breach of copyright
If you infringe on copyrights, trademarks or intellectual property
Lost or damaged documents
If you lose or damage documents while they’re in your care
If an employee commits a malicious act that causes a loss for your client
How much does professional indemnity insurance cost?
Insurers will set your premiums for professional indemnity insurance based on factors such as:
Size and type of business: Bigger businesses generally have more at stake when it comes to financial and reputational losses, so you’ll generally need higher levels of cover if your client is a big company
Nature of the work you do: If your business faces high levels of risk, then insurers are also likely to charge more in premiums
How much professional indemnity insurance do I need?
Most insurers offer between £50,000 and £5 million in terms of cover. To get a good idea of how much you’ll need, check:
Your business contract
If your contract requires you to have professional indemnity cover it’ll usually specify the minimum amount you need
Factoring in how much you’re being paid, and the overall value of your work can help you judge the appropriate level of cover
You can always ask any regulatory bodies for help and guidance