You’ve worked hard to set up your business, so it makes sense to protect it. Here are some good reasons for taking out professional indemnity insurance.
The key reason for taking out professional indemnity insurance, or PI for short, is to provide a safety net in case you need to pay to correct a mistake, or to cover legal costs, if you make an error in your work.
But there’s more to PI insurance than you might think. And understanding the finer details of the cover available could help to save your business if an unhappy client brings a claim against you.
Anyone who provides a professional service, gives advice, handles client data or business, or is responsible for intellectual property should consider taking out PI insurance. Insurance might also be a condition of a contract that you undertake, or of a professional body that you belong to.
Mistakes can happen
It’s important that you feel confident in the quality of your work. That’s the way it should be. And you’ll undoubtedly do everything you can to avoid making a mistake resulting in a claim for negligence.
While protection in the event of negligence forms the core of the cover provided by PI insurance, it’s important that you consider a policy that offers cover for intellectual property, dishonesty, defamation and loss of documents too.
Why? Because it’s not just claims of negligence that can harm a small business. However robust your processes are, it can be easy for you or one of your employees to slip up when juggling the day-to-day running of the business.
Perhaps an employee sends a gossipy email about a difficult client to a supplier and copies in the client by accident.
Or your IT system may fail causing you to lose some of your client data or documents. It can be difficult and costly to retrieve it.
And a case for infringement of intellectual property rights could arise if you use a client’s logo in your promotional literature without asking for permission first.
It’s also crucial that you choose a policy that’s tailored to your specific business sector or needs. For example, in our experience, unintentional breach of a written contract to supply software or hardware is a common claim in the IT sector.
And damage limitation cover is important for anyone working in media, marketing and PR. Think what would happen if you accidently leaked confidential information ahead of a press launch.
It might feel like the end of the world if a case is brought against your business, but if you have the right level of cover in place, your PI insurance can help to put things right. This means that you can keep your business going even if the worst comes to the worst.
To learn more about personal indemnity, visit our article on what is professional indemnity insurance.
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