Professional Indemnity Insurance

Whilst indemnity insurance is not required by law, it is a type of insurance that the vast majority of businesses could not do without, particularly when you are giving advice. Just having a claim raised against you, regardless of whether it’s founded or even successful, can be timely and very costly. Our professional indemnity cover provides legal defence costs from the outset. If the claimant is successful and you have given wrongful advice, the policy will pay compensation awarded against you. It’s also true that many professional trade organisations and institutions require you to have minimum levels of indemnity insurance before becoming authorised or a member.

Insurance Brokers and Insurers cannot tell you what levels of cover you require, but we can  provide a variety of options  including a combination of indemnity limits and the first amount of any claim that you will be responsible for i.e. the excess.  It is essentially your responsibility to take out adequate cover, although our advisers can go through your options over the phone and explain how you might want to calculate this cost. Many industry organisations and professional bodies will likely be able to offer you guidance as many will have minimum insurance requirements for authorisation or membership. Remember to review your customers contractual requirements, as these will often specify the limits of indemnity and the number of years they would expect you to arrange cover from the start date of contract.

Professionals offering advice or providing professional services from home can still accidentally breach their professional duty of care by giving wrongful advice or making mistakes. Such errors can be costly - particularly when you are found to be at fault.

The answer depends on your business activities. We can readily provide public, products and employers' liability insurance packaged together with professional indemnity insurance in one combined package. In addition to protecting your liabilities, we can also offer business insurances cover for loss or damage to commercial property, buildings, office contents, stock and computer equipment (including loss of data.) and business interruption cover for loss of income.

We can advise you on a variety of liability insurances and will establish your needs. If you have employees, you will need Employer’s liability cover by law. Also if you supply products you’ll have exposure for claims arising out of the supply of faulty products. i.e. products liability. What we can’t tell you is the specific indemnity limit of the sole traders liability insurance you should take out. It’s very unique to your business and may sometimes be influenced by your customers or local councils’/authorities’ requirements.

It’s important that you review the levels that you arrange, as these need to be increased to reflect awards made by courts which tend to increase over time, either due inflation or regulation. It is well worth speaking to local authorities and councils to see if they have any minimum requirements you should adhere to.

Professional indemnity insurance is often sold in varying limits. To decide how much professional indemnity insurance you need, you should consider:

• The size of your business
• The size of the clients you are dealing with
• How much it might cost to defend yourself in court
• Is your industry regulated?

The amount of cover required will depend on the amount of exposure that your client has.

If you’re in an industry which requires you to have professional liability due to regulations, it’s likely that there is a recommended amount of cover associated with your profession. You can check this with your regulator to ensure you’re covering the amount required of you.

Public liability insurance covers you and your business should a member of the public sue after an injury or damage caused by your negligence. You particularly need this cover if you are visiting other people’s properties.

You often need more cover for public liability than you think, as third-party public accidents can easily happen and these claims often escalate. Public liability insurance can provide cover for a wide range of professions from tradesmen to dog walkers with a variety of cover options to tailor your policy to your business needs.

If you have tools, hired-in or own plant, or specialist IT equipment for your trade, ensure they are covered. This both protects you against safety risks at work, and covers you against financial risks should your equipment be lost, stolen or damaged. If you are working onsite with tools in a vehicle, you can also feel secure they are covered against theft.

If your business supplies goods to customers, product liability insurance covers you against legal costs should a customer claim for injury or property damage as resulting of a faulty or defective product you have supplied. Note this applies to digital / virtual as well as physical products.

When you stop trading or retire, there is still the chance that a claim may arise out of work that you will have completed in the past. Even if unfounded, any claim for breach of professional duty will cost you money to defend. Therefore, it is important that you arrange professional Indemnity cover arising out of past work for a period of time after you have ceased trading. This is known as Professional Indemnity run off cover. Professions such as Chartered Accountants or Surveyors and solicitors are required to arrange this for periods up to 6years after closing down by way of professional bodies and the law society.

• Your legal defence

  If a client does bring a claim against you, you’ll need to defend yourself in court whether their claim is justified or not. PI will cover the legal expenses associated with the case.

• Compensation

  If a client wins their case against you, they are likely to be awarded the sum of money they lost as a result of your advice. In addition, they may be awarded compensation. Both of these are covered by a PI policy.

• Run off insurance

  If your firm is ceasing to operate, you may still have a claim pop up unexpectedly in the future. Run off insurance is to ensure these claims are still covered and you are not left liable.

Some professions are required to have professional liability by regulators in their industry. This includes:

• Financial advisers
• Solicitors
• Architects
• Chartered surveyors
• Healthcare professionals

Though not a legal requirement for everyone, professional indemnity is worth considering by any company or sole trader that is in the business of offering advice, knowledge or skills as part of their services. It’s also worth remembering that, with this type of cover, you’ll be protected regardless of whether a claim is justified or not.

Furthermore, one of the most exciting business trends of recent years is the rise of independent consultants and small businesses, which offer highly-specialist knowledge, skills and advice to clients and customers.

Offering these kinds of services is not without its risks. Mistakes are made from time to time, and without the right cover, these can prove costly.

Starting your own practice can be an exciting time, but it can also be daunting going out on your own, particularly with all the set up costs involved. When it comes to insurance, you need to consider whether you can afford not to have it in place. Faith Chapman from Towergate Insurance explains why professional indemnity and public liability insurance is important:

Professional indemnity cover will protect against any claims made against you should you be accused of Professional Negligence, this can include things such as incorrect advice or recommendation, breach of professional code of conduct, loss of documents or breach of confidentiality. A client could allege that as a result of a recommendation you made in a session, they have suffered an adverse effect and as a result they have been harmed. This type of policy will cover the costs to defend you against this allegation, and ultimately if the client is successful in suing you, will pay out the damages awarded.

Public liability cover will protect you in the event of any claims made in respect of accidental injury or damage to a client or a member of the public, and it also covers loss or damage to public property. If for example you accidentally spilt coffee on a client’s laptop this would be covered or if a client were to trip over whilst visiting you, this policy would cover the legal costs to defend you, and again pay out if the client was successful in suing you.

Read our guide on  'What is the difference between professional indemnity and public liability insurance?'.

Many of our customers are eligible for a discount on their insurance simply by being a member of a professional association or industry body. What’s more, for many of these, we offer dedicated wordings especially tailored to your profession, meeting the standards required by professional bodies. This means you can get specific cover with great discounts! Speak to one of our advisers to find out how much you can save.

If you would prefer to spread the cost of your policy you have the option of setting up a Direct Debit to pay your premium in equal monthly instalments through our preferred provider, Premium Credit Limited (PCL).

If you want to know more about our monthly payment option, please read our dedicated page on Direct Debit.

To understand more about how PCL work together with Towergate, please read our Regulatory Information.