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Professional Indemnity Insurance

Professional Indemnity Insurance

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About Professional Indemnity Insurance?

Do you work with clients and provide advice or services? If you do, then you may need professional indemnity insurance. This policy can provide coverage in situations where your clients suffer losses thanks to you. Mistakes are part and parcel of life, but that doesn’t mean you should be made to suffer financially.

At My Key Man Insurance, we can help you compare professional indemnity insurance quotes today. We offer the best prices around – we won’t be beaten.

What is Professional Indemnity Insurance?

This is a type of business insurance that can help protected businesses being sued by clients. Why would a client sue you? Well, if you make a mistake that causes them to lose money, then they put you at fault. As a result, a lawsuit will occur as they try and get compensation to make up for this loss of money.

For example, let’s say that a client trusts you to invest their money, and you end up making a significant loss. They put their trust in you and paid you to invest their money wisely, but you made a mistake and failed. Therefore, they can sue you for compensation. If you have professional indemnity insurance, then the compensation costs can be covered for you.

Who needs Professional Indemnity Insurance?

Professional indemnity insurance isn’t compulsory.

Professional indemnity insurance isn’t compulsory for every single business in the UK. It’s not like employers liability insurance where you legally need to have it. Instead, it’s mainly relevant for companies that offer professional services, give advice to clients, or take control of intellectual property and client data.

Consequently, many different businesses may require professional indemnity insurance. Here are a few examples of companies that will benefit from it:

  • Solicitors
  • Brokers
  • Financial Advisors
  • Accountants
  • Architects
  • Chartered Surveyors
  • Healthcare Professionals
  • Consultants

The list goes on and on – any company that deals directly with clients and provides them with something that can have positive or negative consequences will probably need this type of business insurance.

While professional indemnity insurance is generally not compulsory, there are instances where it is mandatory. Typically, this is due to certain professional bodies or regulatory committees that state all businesses under their jurisdiction must have it. The reason for this is that it helps maintain excellent standards within certain industries and provides clients with some added protection in case things go wrong.

Technically speaking, any business can take out a professional indemnity insurance policy. Yes, it’s mostly relevant for businesses that provide advice and services to clients. But, nothing is stopping any other company from getting a policy, just to give some additional protection.

What does Professional Indemnity Insurance cover?

Professional indemnity insurance can protect your business when mistakes are made.

A professional indemnity insurance policy will cover your business for compensation payments if you are sued by a disgruntled client. These payments tend to include the financial losses the client received, but there could be extra costs added onto that. Additionally, this insurance also covers any legal fees incurred during the lawsuit.

Professional indemnity insurance can protect your business when mistakes are made. Anyone can make an error – nobody chooses to make mistakes. Sometimes, you believe you’re doing things correctly or giving good advice, but it can fail. Other times, you accidentally make mistakes while providing your service; it happens.

With that in mind, there are lots of professional mistakes and errors that are covered by professional indemnity insurance:

  • Negligence
  • Unintentional copyright breaches
  • Unintentional confidentiality breaches
  • Loss of client data
  • Wrongful advice

There are many examples of professional indemnity insurance in action. A business that’s working with a client and accidentally sends confidential information to the wrong person can be sued by the client. You’ve given away private data, which is a breach of confidentiality.

Likewise, a solicitor that gives inaccurate legal advice to a client, causing them to break the law and lose money, can be sued by that client. This is considered negligence as they didn’t take care to research everything and provide accurate advice.

In most cases, professional indemnity insurance covers financial losses for the client. However, it can also cover other things as well, such as personal injury or property damage. But, this is only the case if your client was injured – or their property was damaged – as a direct result of your negligence or mistakes while working for you. So, if you built their house and then they fell through the ceiling and broke their leg, then any compensation is covered by this policy.

Consequential loss is also sometimes covered under professional indemnity insurance. This refers to financial losses suffered by a client as an indirect result of your errors. Bear in mind that there are some exclusions here, and you can contact us for more information.

Coverage is also there for any employees or contractors you have. Make sure you inform us about this before taking out your policy. If anyone that works for you gets sued for negligence or professional errors, then they will be covered under your policy.

What isn’t covered by Professional Indemnity Insurance?

this insurance doesn’t cover breaches of contracts.

Generally speaking, if you make a mistake that impacts your client, then professional indemnity insurance covers any compensation from the resulting lawsuits. However, there are a few things that get excluded from the policy.

First of all, if someone visits your business premises and slips on a wet floor, then professional indemnity insurance won’t cover you against any injury claims. This is because public liability insurance covers personal injuries in your workplace. Likewise, if an employee is injured at work or has any claims against you, then you need employers liability insurance to cover this.

Also, professional indemnity insurance doesn’t cover you if there’s any reputational damage caused by your mistake. For example, you may do something that harms the reputation of a business and leads to financial loss. In most cases, you won’t be protected here.

Lastly, this insurance doesn’t cover breaches of contracts. So, if someone sues you for breaching your contract with them, then any legal fees or compensation isn’t covered. Instead, you need specific contractual liability insurance.

What are the benefits of Professional Indemnity Insurance?

For many companies, it’s simply not worth the risk to not have this insurance.

Having this business insurance can be very beneficial for your company. As previously stated, mistakes happen all the time. But, thanks to this insurance policy, your business is protected when they arise.

As a result, you avoid being hit with considerable financial losses. Compensation claims can be big, and then there are the legal fees on top of that. For many companies, it’s simply not worth the risk to not have this insurance.

Plus, having professional indemnity insurance can also help you gain clients. Some people won’t do business with you unless you have it. The reason for this is simple; they know there’s a safety net if you make a mistake, and they suffer financial losses. Thanks to your insurance, they know they’ll get compensation.

How much does Professional Indemnity Insurance cost?

With regards to the amount of cover you need, it’s entirely up to you.

The cost of this insurance varies depending on the kind of business you have and the degree of coverage you need. Some companies are more at risk of making mistakes than others, so the cost of a professional indemnity insurance policy will be higher than those where the risk is small.

With regards to the amount of cover you need, it’s entirely up to you. Small businesses won’t need as much protection as bigger ones, purely because you may have fewer clients, or you deal with less money. We’re always available to discuss your coverage requirements if you need help deciding on how much you need.

If you want a more accurate way of understanding how much this insurance costs, then contact us today. We will compare professional indemnity insurance quotes, and provide you with one that can’t be beaten.

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Meet Our Team

Our dedicated team are here to offer you expert FCA qualified advice along with 1st class support to make sure the process is fast and simple

meet our team

Jody Pearmain
Jody Pearmain

Managing Director & Founder (My Key Finance Ltd)

Lori Norton
Lori Norton

Administration Manager at MyKeyManInsurance.com (My Key Finance Ltd)

Tyler Pearmain
Tyler Pearmain

Senior Keyman Insurance Adviser at MyKeyManInsurance.com (My Key Finance Ltd)

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Keri Gardiner

Customer Service & Website Admin at MyKeyManInsurance.com (My Key Finance Ltd)

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