Professional indemnity insurance, also known as professional negligence insurance but more popularly known as professional indemnity insurance in the UK, is a type of liability insurance that helps to protect professionals in many different types of businesses. This insurance protects a range of different professionals from claims made against them by clients and other employees, suppliers, business partners or clients. It covers solicitors, accountants, architects, consultants, architects, auditors, lawyers, doctors, dentists, surgeons, administrators, marketing managers, advertising agencies, internet marketers, publishers, printers and many more professionals. The way professional indemnity insurance works differs from place to place, but in general it provides protection for the professionals and protects them from claims made against them by customers, clients and suppliers.
When it comes to claims made against you by another person or company, it’s important that you have adequate and effective professional indemnity insurance to keep you protected. Claims often make it difficult for you to run your business or run your job, and the legal costs these claims can involve can quickly cripple any company. Not only can you face expensive legal costs if you lose a claim, but you may also find that you’re unable to protect your client or customer’s rights. Professional indemnity insurance provides cover for you and your business in case claims are made against you by a client for negligence or improper action. While it’s unlikely that you’ll be sued for professional negligence, it is always better to be safe rather than sorry, and professional indemnity insurance provides a high level of protection against possible claims.
Claims made by clients can include any of the following:
inaccurate billing, overcharging, breach of contract, compensation claims and negligence. If a client makes a claim for any of these reasons, you need to ensure that you have adequate and effective professional indemnity cover. While it’s unlikely that you’ll ever be sued for negligence or improper performance, it’s still important to have professional cover just in case your client decides to press charges. Your chosen specialist insurer will explain the claim submission process and how to make a claim.
There are three main types of professional indemnity insurance.
These are general public cover, specific professionals cover and consultants/clinicians cover. General public cover means that you take out a policy that covers you for all areas of your professional life. These usually come from the Society of Personal Insurance Consultants (SPIC) – which represents most UK professional indemnity insurers. Specialist professional indemnity cover is normally supplied by one of the larger professional body providers such as Legal & General Insurers, Solicitors & Advertising Agencies (LGA), British Insurers Association (BIA), or the Chartered Institute of Professional Debt Arbitrators (CIPDA). There are many other smaller specialist cover suppliers available but these three offer the widest choice of products and services.
The second type of insurance you might need is specific professionals cover.
This type covers you for professional services carried out by you or a member of your family. For example claims for claims made when using faulty equipment or carrying out work on a client’s home. This type of insurance can usually be supplied from one of the larger professional bodies but there are also a number of smaller specialist insurers who may specialise in specialist areas of cover. Examples include Legal & General Insurers.
Finally, you can also take out professional services and liabilities insurance.
As the name suggests, this will cover you if you accidentally injure a client whilst taking over professional services. Examples of this would be claims for negligence or injuries caused by over-cautious attitude or actions on the part of a consultant. These can obviously be very difficult to prove and would require the client and insurance company to prove that there was a likelihood of such an incident occurring. Examples of this type of insurance could include claims for personal injury or wrongful death.
It is important that you check the terms and conditions of the policy very carefully.
When it comes to obtaining professional indemnity insurance it is important that you check the terms and conditions of the policy very carefully. For instance, some polices state that they are only available for small businesses and self-employed people. Other insurance providers state that it is compulsory for professionals to have insurance and that they cannot work in any other profession whilst taking out such cover. It is therefore essential to check the requirements of your chosen insurance provider. Some polices provide an automatic extension of the policy if your contract of employment ends whilst others may vary and take into account previous periods of employment. It is worth bearing in mind that if you were a professional writer working as an accountancy consultant and faced a claim that you had no legal requirement to carry out professional services, your case may be weakened as it would be expected that all professionals in the UK have such cover.
If you were a solicitor or solicitors then you might consider purchasing such cover from a professional indemnity insurance broker. A broker will usually be able to offer more extensive cover than a standalone supplier and they are typically known to extend their indemnity insurance for a range of activities. Examples of activities which would be covered include claims for negligence, breach of contract, professional misconduct and errors and omissions. The cover would normally last up to one year and could be renewed after this time. As the number of solicitors has increased over recent years, so there are now many companies who offer PI cover and it is worth choosing a company with a good reputation and services that meet your needs.