Professional indemnity insurance protects business professionals and their companies if anyone was to attempt to make a claim against them suggesting that they had breached their contract or been negligent.
A lot of businesses are required to have professional indemnity insurance; if your business gives advice, supervision or design then you will most likely need professional indemnity insurance. Companies such as solicitors, accountants and surveyors will all have to have this type of insurance in order to protect themselves. A lot of other industries also choose to have the insurance – even if they don’t need it – in order to protect themselves financially if a claim was to be made against them.
Someone may choose to make a claim against a professional if they feel that they weren’t treated as they should have been and that they have been neglected. Although the claim may not be true, it’s always a good idea to have the insurance as today, defending yourself in court can be just as expensive as anything else.
This type of insurance ultimately protects a professional against any financial loss if a claim were to be made against them. There are different types of professional indemnity insurance policies that you may be offered depending on your circumstances and area of business.
There are many benefits to taking out this insurance including the fact that you won’t have to take any time to do any investigations as the insurance company will do them for you. Your policy will also pay any legal costs that may accumulate during the investigation and if you’re found guilty then the insurers will pay the compensation up to the limit of the policy.
The amount of your policy will depend on a few factors including the type of business you work in, which industry you work in and whether you have made any claims in the past. If you contract some of your work to other people then your policy will also cover them as they are working on your behalf.
One thing that you should be aware of when taking out professional indemnity insurance is the fact that it only runs for a certain period of time; so if you cancel your contract because your business is closed then you will no longer be insured if someone makes a claim after the closing of your business. There are ways that you can extend your cover under these circumstances though. You should also remember that if you are found guilty of neglect then your insurance can only pay out claims to the limit of the policy. If the cost of the claim is more then you will have to make up the difference.
Chloe Jenkins discusses the benefits of having professional indemnity insurance, on behalf of jhib.co.uk