Imagine this, your business has at last taken off and you are enjoying some success after many years’ of hard work. Now imagine that one day you make a slight mistake and a client sues you for the negative impact it has had upon his or her business. Without any type of professional indemnity insurance where might you get a large sum of money to pay for your legal and other costs? A small mistake on your part may end up draining your business of funds.
In some lines of work professional indemnity insurance may actually be compulsory. This might typically be the case for anyone working as an advisor, consultant or as an accountant in particular professions.
Many other types of business may benefit from taking out this form of insurance, even if it is not compulsory.
For example, some local councils may only work with companies who can show proof of insurance.
Events that may be typically covered in a policy
While every insurance provider differs in what they offer in their insurance policy you may find that a policy covers all or some of the following: slander and libel claims, professional neglect, copyright breach, confidentiality breach, making a statement that may be considered to be negligent or performing an action that is considered negligent on your part.
Go over the fine print
Just as it is important for you to ensure that any contracts you hand out to clients or literature detailing the work you intend to do are set out properly, the same goes for your insurance policy. Insurance policies may differ slightly in the cost of the premiums between providers, and they may also differ when it comes to the fine print. There are nearly always limitations on the amount you may be able to claim if needed, and exclusions typically apply. Finding out what you are allowed to claim for and what not before you pay for the insurance might save you problems in the event that you ever do need to claim.
Peace of mind
In short, professional indemnity insurance is there to provide peace of mind – if a mistake is made by you in your business that is covered by your PII insurance, typically you are not left to pick up the costs alone.
