Protection from the Cost of Claims with a Professional Indemnity Insurance Policy

Sometimes referred to as PI, Professional Indemnity Insurance is a business product designed to protect you or your business from claims against you. Professional Indemnity Insurance is suited to individuals or small business that offer knowledge, skills or advice, and may be at risk of a client claiming they have suffered as a result of a mistake or negligence. Remember, if you or your business come into contact with the public in the course of your work, you should learn more about Public Liability Insurance too. PI and Public Liability Insurance are different and do different things. Your business may well need to consider having both these kinds of UK Insurance.

Do I need Professional Indemnity Insurance?

There are a wide range of professions who might find themselves in a situation where Professional Indemnity Insurance would help.

Broadly, the types of professions where Professional Indemnity Insurance is considered most valuable are those that offer knowledge, skills, expertise and advice. When you provide these kinds of services, there is always a risk that your customers or clients will be unhappy. They may feel that you or your business have made a mistake. They may suggest that important matters were negligently overlooked. Or there may be developments that lead them to feel you or your business has infringed intellectual property or been responsible for data loss or breaches. None of these are situations you want to consider, but, should they happen, you may face considerable claims made against you by the client through legal proceedings.

Professional Indemnity Insurance is often taken out by:

• Managment and Business Consultants
• Designers, Web Developers, Advertising Agencies
• Technical, Engineering or IT Consultants or Contractors
• PR Agencies
• Trainers, Tutors, and Instructors
• Surveyors

Is Professional Indemnity Insurance a legal requirement in the UK?

No. The law doesn’t require you to have Professional Indemnity in the UK. However, there are some professions that will be required to have PI by the professional or regulating body that oversees their occupation. Examples of these professions, include:

• Accountants
• Architects
• Chartered Surveyors
• Financial Advisors
• Solicitors

What does UK Professional Indemnity Insurance usually cover?

When you are comparing Professional Indemnity Insurance, you should look out for these kinds of claims that you might want to cover:

• Professional Negligence
• Errors or Mistakes
• Loss of Data
• Unintentional Breach of Confidentiality
• Defamation or Libel
• Intellectual Property Infringement

You should also have a clear understanding of what will not be covered by any UK Professional Indemnity Insurance policy that you are considering. Remember that PI Insurance will only cover claims made by a client and only claims made during the period that the policy is in place for work done whilst the policy is in place.

Tell me more about the limits of Professional Indemnity cover…

UK Professional Indemnity will not cover you for claims against you made by the public for injury, for example. To be protected in the event of these kinds of claims, your business will need to take out Public Liability Insurance.

Your Professional Indemnity policy will also not cover you for any claims made by anyone you employ. That would be covered by your Employer’s Liability Insurance – which is a legal requirement for all UK businesses.

Finally, cover is only provided for claims and work that take place while your policy is active. This is quite important. It means that you should take out your Professional Indemnity Insurance as soon as you start providing services, so that, should there be an issue, you will have had an active policy in place when the work that is being questioned was taking place. It also means that, if you stop work or take a career break, or change professions, you will want to consider continuing your policy for a while.

Don’t let your Professional Indemnity Insurance cover expire.

Here’s an example. A business consultant works with a client. All the time she is doing the work, she has Professional Indemnity Insurance in place. Then she decides to stop her consultancy work. Two months later, that client finds a problem with the work she did and believes it lost them money. The old client makes a legal claim against her. One of two things can happen next:

• If she has not kept her insurance, all the legal costs and any awarded damages will have to be paid out of her pocket.
• If she still has Professional Indemnity Insurance in place, that will cover the costs.

Does that mean I have to have Professional Indemnity Insurance forever?

No. That would be annoying. You want to arrange your cover so that it lasts as long as you are working and then keep it active for a period after that, to guarantee that you are covered for any claims that arise from previous work. In the UK today (2023) the usual limitation for a client to make a professional negligence case is six years. So, as an example, you might want to keep a level of Professional Indemnity Insurance for six years after your last piece of work. This kind of Professional Indemnity Insurance is often referred to as a run-off policy.

More Types of UK Insurance

To get the best value when you are buying UK Insurance, you will probably need to compare a number of quotes. Luckily, that can be quick and easy to do. Take a look at the Insurance categories below to find competitive quotes from quality insurance providers the easy way.

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