Professional indemnity cover isn’t just for surveyors and accountants
As a small business, there are some insurance policies you have to buy – either because the law enforces it (employers’ liability if you have employees, or motor insurance for your car or van for example) – or because it just makes good sense for you and your business needs (such as insurance for your business equipment or buildings cover for events such as fire and flood).
If you’re a professional business – and by that we mean you provide advice and services to your clients – professional indemnity (PI) cover should not only be seen as a ‘good sense’ purchase,’ it should be in that basket of ‘must haves’ when considering what business insurance you need.
What is PI?
Essentially PI will protect you in the event that your business is sued by a client unhappy at the professional advice you have provided. You may not have made a mistake – but you still have to fight the claim. PI cover to protect you from legal costs and damages resulting from a claim is just as relevant for newer and ‘emerging’ professions such as green energy consultants, IT consultants, or coaches and trainers as it is for the more traditional legal and accountancy practitioners.
Like anything though, you get what you pay for. Think of it like buying car insurance. The cheapest motor cover is third party only but if you own a reasonably new or expensive car, you’ll want fully comprehensive protection to protect you in case you are in an accident through no fault of your own.
PI insurance is no different. If you’re a professional business, you’ll not only want cover for negligence, but you’ll also want to be sure that the policy has a high enough limit (i.e. it will meet the full cost of any claim, including often substantial defence costs) and offers broader cover for areas like your own advertising and crisis containment.
And the award goes to…
One example I often give of broader PI cover is that of a business that picked up an award. Having attended the awards ceremony, the delighted business owner uploaded a picture onto their website of them collecting the award from the celebrity presenter. Sometime later the business owner received a demand for a significant sum from the celebrity’s agent relating to image rights for using the picture. A broader PI policy could meet the cost of making mistakes such as this, or for unintentionally using unlicensed images in promotional marketing material, or for unwittingly libelling an individual or business on social media sites like LinkedIn or Twitter.
In a professional services world, your reputation is everything and a good PI policy will also offer the services of a public relations agency if you suddenly find newspaper journalists at your door demanding to find out more about a problem you’ve had with a client – it could have, for instance, been a serious accident at a client’s premises where you recently performed a health and safety audit. If you don’t deal with problems like this they could escalate and destroy your reputation and your business.
Don’t risk it
We believe there are still a great many small professional businesses that do not currently have PI insurance that could be at risk of being sued and should consider PI as a key part of their business insurance package.
Make sure though that the PI policy you choose:
- is tailored for your specific business sector or needs
- will offer enough cover to meet the entire cost of a possible claim including legal costs
- offers broader cover to include areas such as crisis containment; advertising cover (misuse of unlicensed images for example on a website); accidentally disclosing a client’s confidential information; the costs of putting right lost or damaged documents or data.
Need further information? Visit our article on what is professional indemnity insurance.