The level of cover you’ll benefit from depends on the size of your business and the type of work you are doing. For example, a start up with a relatively low turnover may only require a low level of cover to start off with (approximately a limit of £50,000), while a larger organisation may find security in a higher level of cover (a £1 million limit being a common choice).
When you buy insurance, whether it’s for your home or your business, you’ll be asked how much professional indemnity insurance you want to buy. And because each business is unique, there’s no one-size-fits-all solution. Hiscox offer cover up to £10,000,000.
If you’re unsure about how much cover your business needs, here are a few things to consider when choosing what level of PI is appropriate:
The size of client contract
An important factor to think about is the size of the client. How deep are their pockets? If they have the cash they may decide to sue you as a matter of principle, and you’ll need to make sure you can afford it.
Some contracts insist that you hold a certain level of PI, such as ACCA, the professional body for accountants. If this is the case, then the level of minimum level of PI may be decided for you. However, not all clients will specify a limit, so it’s worth discussing the potential risks and policies available to agree on a level of cover that will suit you both.
It makes sense for anyone who provides a service or gives advice to consider PI cover. Of course, in an ideal world mistakes wouldn’t happen, but you can’t predict the future and even the happiest of work situations can turn sour if what is delivered does not meet client’s expectations.
If the worst comes to the worst, a client may ask for compensation to cover the money paid out to you, as well as the cost of rectifying any mistake you make. Think of the worst-case scenario and how much it could post to put it right.
As well as potentially being required to compensate your clients, there may be legal costs to pay for the investigation and defence of your case. Don’t underestimate how much this could potentially cost.
Getting professional indemnity peace of mind
When you run your own business, the responsibility for getting things right sits firmly on your shoulders. While it may seem like a lot to consider, particularly if your business has never faced a claim situation before, it makes sense to get the right level of protection should the worst happen. This will ensure you have the appropriate legal support and the financial means to get your business back on track as quickly as possible.
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