What is professional indemnity insurance?
What is professional indemnity insurance?
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.
Is professional indemnity insurance compulsory UK?
Is professional indemnity insurance compulsory? Whilst professional indemnity insurance is not a legal requirement, it is often compulsory before membership of a chartered body.
What is professional indemnity insurance and do I need it?
Professional Indemnity Insurance provides cover for legal costs and expenses incurred in your defence, as well as any damages or costs that may be awarded, if you’re alleged to have provided inadequate advice, services or designs that cause your client to lose money.
What is not covered by professional indemnity insurance?
Professional indemnity insurance can cover compensation payments and legal fees if a business is sued by their client for a mistake they’ve made in their work. Bear in mind, however, that professional indemnity insurance does not cover you for the cost of any reputational damage that the mistakes have caused.
How much does indemnity policy cost?
How much does indemnity insurance cost? Most policies cost in the region of a few hundred pounds. It’s a one-off payment. There’s no annual premium to keep paying.
Do I need both public liability and professional indemnity insurance?
Neither public liability nor professional indemnity insurance are a legal requirement in the UK. If you are the sole employee of your business, then you do not need to have employers’ liability insurance.
Who needs professional indemnity cover?
Accountants, financial consultants, surveyors, engineers and healthcare professionals are all likely to need professional indemnity insurance due to requirements set by their respective industry bodies.
Is professional indemnity a legal requirement?
Professional indemnity insurance is not a legal requirement – but professionals who work in certain sectors should still consider it one of their core business needs. Some clients may choose to make this insurance a contractual requirement or your industry regulator might say it’s essential.
Who should pay for an indemnity policy?
Sellers usually pay for the policy to salvage the sale. But if the seller refuses to pay, you’ll have to negotiate over who covers the cost.
What is the difference between insurance and indemnity?
Public liability insurance can cover compensation claims if you’re sued by a member of the public for injury or damage, while professional indemnity insurance can cover compensation claims if you’re sued by a client for a mistake that you make in your work.
Do sole traders need professional indemnity insurance?
Sole traders need professional indemnity insurance to cover for professional business risks such as incorrect advice, legal claims against you for the provision of professional services and failure to perform essential processes and due diligence.
What do you mean by professional indemnity insurance?
What is professional indemnity insurance? Professional indemnity insurance is a type of cover to protect your business if you provide designs, specifications, advice or instructions as any part of your job.
How much do solicitors need to have indemnity insurance?
For example, solicitors are required to have professional indemnity cover of between £2 million and £3 million for any single claim made against them. If you are not a member of a professional body you can ask your clients how much cover they expect you to have.
Can a client Sue you for professional indemnity insurance?
In both cases, you could be sued by your client. The compensation payment will usually take into account the financial loss that the client has suffered due to your mistake. Bear in mind, however, that professional indemnity insurance does not cover you for the cost of any reputational damage that the mistakes have caused.
What does aggregate mean in professional indemnity insurance?
‘Any one claim’ and ‘aggregate’ refer to the basis of cover on a professional indemnity policy. An ‘any one claim’ policy provides cover up to the full limit for each individual claim made in the period of insurance, whereas an ‘aggregate’ policy provides cover up to the full limit for all claims made in the period of insurance.