What is it and do I need professional indemnity insurance?
Professional indemnity insurance covers you in the incident of a client taking legal action against you. This could be due to accusing you of negligence or inadequate services on your behalf, this insurance covers legal costs and compensation claims if you are proven guilty for what your client has accused you of.
This is why it is so important to make sure you are covered in case these unfortunate incidents do occur. As a business, you should also prepare for the worst, having professional indemnity insurance allows you to have peace of mind for when the worst does happen, this way you will be prepared.
How much professional indemnity insurance do I need?
First things first it can be difficult to estimate how much cover you will need for your business because it all depends on who you are and what you do.
When deciding on what type of cover and what limit you should use consider these following things:
WHAT YOU DO:
- What’s your business?
- What services do you offer to your clients?
- What aspects could go wrong and end up costing you?
This will differ from business to business of course but for example, if you are an Architect and a client sues you, you will need a higher limit of cover to take out due to needing to cover the cost of buildings that you will be working on and £100,000 isn’t going to help you cover the cost of buildings that could be worth millions, right?
Make sure your level of cover is more than enough to compensate for the total bill to fix your mistake with the client and any legal costs.
WHO YOU WORK FOR:
- Are your clients a small business? Or a large multinational business?
- Are they relaxed or strict?
- As a lone contractor or small business owner, you need to take into consideration who you are up against if for some reason they decide to take legal action against you.
- If you find yourself on the dreading end of a huge bill to pay ensure you have the correct cover in place to cover anything and everything that could possibly go wrong.
How can you find out how much you need?
If you’re undertaking a contract for a particular client they may specify a minimum amount of professional indemnity cover required for you to undertake the contract that has been put in place between you and your client. This way it can help you to get an idea of how much it will cost you and which level of cover you should choose.
Remember though, this is just a minimum level of cover that may be required by your clients, you may decide that your business requires a higher level of insurance just to be on the safe side and this is a good idea.
HOW MUCH YOUR WORK IS WORTH:
Ask yourself:
- How much on average do you charge your clients?
- What are your largest fees?
- What’s a typical total project for a given client?
Don’t just assume that you can only be sued for the amount that a client pays you, this isn’t always the case…
It isn’t the best idea to limit your liability as if a judge feels you are liable for more, you will have to pay it whether you are covered or not.
If you have been working on a project for a client whether it be a social media campaign or IT changes and there has been a delay or part of the project has been disrupted they can account you responsible for the total loss in costs, so be careful and make sure you are covered.
Protect yourself
It’s not the nicest of surprises when a client is suing you but it can happen I’m afraid. Making sure you protect yourself against allegations; whether it be negligence or costing your clients money; ensuring you are covered is a great start.
Here at IPro, we make sure you can seek the cover you require and ensure you are covered in all angles of the process, making it easy and simple.
You’ll have access to specialist advice from a team of legal eagles who know Professional Indemnity inside out, with the benefit of also taking out cover with premiums that start at just £70 a year.
Other considerations:
Legal costs:
Professional indemnity insurance protects you against the negligence allegations and of course the legal costs of defending you whether you are guilty or not.
You’re thinking well that’s amazing! But all claims legal costs differ from person to person depending on your client and contract.
Now we all know solicitors come with a hefty bill, but you need to take into consideration the cost of your defence and the possibility of your claim being complicated and drawn out which can easily add up and end up costing you tens of thousands of pounds!
If you haven’t got the insurance cover, a surprise bill can leave you out in the cold. So make sure you are considering all possibilities and get the best cover to pay a claims legal costs whether you are guilty or not.
