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Professional Indemnity Insurance

What is Professional Indemnity Insurance?

Professional Indemnity Insurance (PI) covers your business in the event that a third party should claim for mistakes you make or if you are found to be negligent. The policy is designed to protect professionals from claims made against them relating to any actions that may have been erroneous or misjudged. Legal costs will also usually be covered.

Do I need Professional Indemnity Insurance?

The majority of professionals carry Professional Indemnity Insurance. Lawyers, accountants and financial advisors must have Professional Indemnity Insurance by law, and other professionals such as consultants, engineers and architects often decide to take out cover to protect themselves. Usually those in the business of selling their knowledge or skills opt for this type of insurance.

There are many instances which may lead to your business facing a claim, for example providing inaccurate advice or incorrect calculations. Other issues your business may be exposed to include:

Negligence

Dishonesty

Loss of documents/data

Unintentionally infringing on others’ copyrights, trademarks etc.

If a claim is made against you that as a result of your professional negligence the third party have suffered a monetary loss, then your Professional Indemnity Insurance should cover you.

When do I need cover?

You must ensure you are covered both when a claim is made and when the incident happened, even if the mistake was made long before the claim. Therefore if you retire or cease trading you must think carefully about cancelling your policy as a third party could still make a claim against you for a mistake made when your business was still trading.

There can be a long delay between the mistake being made and a claim being made for it. If you decide to cancel your policy you may wish to arrange “run off” cover for sometime afterwards. Similarly, if you choose to change insurers you might also arrange run off cover or come to an agreement with your new insurer to accept any new claims for previous incidents.

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