What is professional indemnity insurance?


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Professional indemnity (PI) insurance is a commercial policy designed to protect business owners, freelancers and the self-employed if clients claim a service is inadequate.

Any organisation which provides a professional service or gives advice could be sued if the recipient is unhappy with their work. A customer might say you were negligent, delivered the wrong training or made a mistake which cost them money.

Indemnity cover, also known as professional liability insurance, is designed to safeguard service-based enterprises, come what may. As a professional, you take pride in doing great work, but if disagreements occur, this cover handles the cost of putting things right – including legal fees.

 
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Guide to professional indemnity insurance

Watch our video guide to understand more about professional indemnity insurance, and how having PI cover in place may help to protect your small business from unexpected scenarios and related costs.

What does PI insurance cover?


Professional indemnity insurance is often explained in terms of what might go wrong – but what does it cover? From Hiscox, PI policies can provide up to £10 million for legal fees or compensation costs. If your business makes a costly mistake – or a customer claims it has – then this financial assistance can help you to survive and thrive beyond the court case.

Hiscox professional indemnity cover also provides industry-specific policies for tailored protection. As your business grows, we’ll help you to cover indemnity risks along the way.

Professional liability insurance helps in a wide range of scenarios such as professional negligence claims, data loss claims and allegations you’ve given poor business advice.

If someone within your organisation fails to apply due diligence, leaves sensitive files on a train or gives damaging advice in an email, it’s easy to find yourself facing legal proceedings. Read our FAQ guide to learn more about breach of confidentiality and what it entails.

Tricky areas such as defamation and intellectual property are also covered by professional indemnity insurance. If your social media intern shares a questionable claim about a competitor or another company says your work is too similar to theirs, having the right professional indemnity policy in place can cover the costs of legal defence and any pay outs.

Professional indemnity insurance only covers events which have occurred since you’ve held such a policy. This is called a retroactive date.

Related guides & FAQs


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How much professional indemnity insurance do I need?

The amount of PI cover you’ll need will depend on the specific circumstances of your business. Discover how much professional indemnity insurance you need with this article. 

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Who needs professional indemnity insurance?

Clients in some sectors might require businesses to have a PI insurance policy before they begin work. Find out who needs professional indemnity cover with this guide. 

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What is the difference between public liability and professional indemnity insurance?

PL and PI insurance both cover compensation claims, but in different circumstances. Our guide covering the difference between the two explains all.