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Professional Indemnity Insurance for Business – Pointers and Pitfalls

January 22, 2018 By Alex Hamilton 18 Comments

Are you wondering if you need professional indemnity insurance for your business? As all business owners know, it is essential to find the right insurance policies to adequately cover your company.

Professional Indemnity Insurance for Business - Pointers and Pitfalls

But there are many insurance policies from numerous insurance companies, and these policies cover a range of different situations. Choosing the right policy can often become all too complicated and time-consuming.

Professional indemnity insurance is one of the most common insurance policies available. It is particularly important for advisory service companies and growing businesses.

Table of Contents

  • What Is Professional Indemnity Insurance?
    • What’s Usually Covered:
  • Pointers
    • Vital for Businesses That Provide Advisory Services
    • Essential for Small and Growing Businesses
    • Speak to a Broker
  • Pitfalls
    • Not Having Adequate Coverage
    • Claims Are Often Unexpected
    • Paying Too Much
    • Claims Brought Against You After Closing
      • Alex Hamilton
      • Latest posts by Alex Hamilton (see all)

What Is Professional Indemnity Insurance?

The right professional indemnity insurance will provide an adequate level of coverage for your business and protect it should people bring any claims against it.

These claims are usually the result of you or your employees being negligent and causing a client monetary loss. Professional indemnity insurance can cover your principals, partners, and employees in the event of someone bringing a case against them on an individual basis.

What’s Usually Covered:

  • Breaches of confidentiality
  • Breach of your duty of care
  • Negligence
  • Conflicts of interest
  • Civil liabilities

*Please note: this is general information only. Not all professional indemnity insurance policies will provide coverage for all areas mentioned above. To find out what your professional indemnity insurance policy covers, speak to your insurance policy provider. It is also important, when finding the right policy for your business, to pay attention to what your policy might be excluding.

Pointers

Here are some of the most important pointers to keep in mind when searching for the right policy.

Vital for Businesses That Provide Advisory Services

If you’re self-employed or run a small business that provides advice as one of your service offerings, professional indemnity insurance is vital. In fact, certain companies will opt not to deal with you or your business unless you have adequate coverage.

Some of the most common businesses that should take out a professional indemnity insurance policy include:

  • IT providers
  • Accountants
  • Financial advisors
  • Solicitors
  • Healthcare professionals
  • Architects
  • Surveyors

In some industries, including a few of those mentioned above, the regulating body might require a minimum level of coverage.

This level of coverage will depend on your industry, the nature of the advice you are giving, the size of the business, and projected budgets of your projects.

Essential for Small and Growing Businesses

While a business is growing, companies often do not understand the risk of negligence, breaches, and conflict.

This ignorance can leave employees blind to potential shortfalls and end in large claims against the business. Taking out a policy will protect you while assuring your clients of your authenticity and that you have appropriate coverage.

Speak to a Broker

A good broker will take the time to gain a solid understanding of your business before assisting you in securing the most suitable coverage for your business.

And he or she will often secure this insurance at the best price. Brokers have experience in dealing with a range of insurance policy providers and will talk you through the ins and outs of professional indemnity insurance.

Pitfalls

Here are the pitfalls you need to keep in mind as you search for a professional indemnity insurance policy.

Not Having Adequate Coverage

Even if you’ve covered everything in your professional indemnity insurance policy, it might not adequately protect your business.

The level of coverage you and your business require will depend heavily on your industry and the type of advice you provide.

When researching your insurance coverage, assess what claims people could bring against your company and what these claims could potentially cost you.

Claims Are Often Unexpected

You might have the best systems in place and train your staff to the highest level. But the possibility of someone bringing a claim against your business still exists.

Claims are often unexpected. They can result in serious repercussions for your business and, in extreme situations, can even cause you to cease trading.

Paying Too Much

It’s important to spend ample time researching the market. Evaluate quotes from different insurance policy providers and compare them to what the policy covers.

Also, take note of any policies that are far cheaper than others because these less expensive policies might exclude coverage of essential aspects of your business.

That being said, insurance is very technical and it can be difficult to compare different products. It is insurance that protects you when someone takes legal action against you and your reputation is at risk.

The last thing you want at that time is the cheapest possible insurance. An insurance broker specialist will be able to present you with the best options for your needs.

Claims Brought Against You After Closing

If your business ceases to trade or you’re self-employed but are now retiring, previous clients and customers can still take claims against you to hold you accountable.

You might need to keep your professional indemnity insurance policy active even after closing shop. Because you are no longer receiving an income from your business, doing so can be very costly and sometimes unrealistic.

You might want to take out a runoff insurance policy. This type of policy will protect you against claims for incidents that occurred while you were trading, but which people are only bringing against you or your company after your original policy expires.

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Alex Hamilton

Online Marketing Executive at White Chalk Road
Alex in a content creator and blogger who loves writing about actionable tips and recommendations for small to medium sized businesses. Alex understands that businesses need quick and easy access to quality and relevant information online and hopes to provide this information through publishing detailed articles for business professionals.
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Latest posts by Alex Hamilton (see all)

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  • Professional Indemnity Insurance for Business – Pointers and Pitfalls - January 22, 2018
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Filed Under: Small Business Advice Tagged With: business coverage, insurance, professional indemnity insurance, small business insurance

Comments

  1. John McGuire says

    April 10, 2020 at 8:52 am

    Always good to see good blog posts like yours outlining the importance of business cover.

    Reply
  2. alex says

    November 18, 2019 at 11:06 pm

    i think every business man need to know about small business health insurance
    alex would love you to read ..Create Angie’s List Review on your WebsiteMy Profile

    Reply
  3. Brian Plain says

    June 18, 2019 at 5:53 am

    Thanks for the article Alex, do you know how much the average premiums are on these types of policies? I have a commercial license people ask me about these all the time but I’ve never really looked into them.
    Brian Plain would love you to read ..Motorcycle InsuranceMy Profile

    Reply
  4. Robin says

    June 25, 2018 at 7:51 am

    Hi Alex,

    Nice piece of content. Very helpful, your article on Professional Indemnity Insurance clear my almost all doughts. and every business owner must have this insurance plan.

    Reply
    • Alex Hamilton says

      July 29, 2018 at 10:24 pm

      Thanks for your comment Robin!

      Reply
  5. Addy Brown says

    April 10, 2018 at 5:57 am

    Hi..
    Thanks for sharing this article as it is very valuable.
    Now I clearly understand What is Professional Indemnity Insurance?

    Reply
    • Alex Hamilton says

      April 17, 2018 at 8:04 pm

      Glad you gained understanding from my article Addy!

      Reply
  6. Aparna says

    March 1, 2018 at 3:42 am

    Hi Alex, Your blogs are awesome.
    You connect the peoples through blogs and your ideas are really amazing .

    Reply
    • Alex Hamilton says

      April 17, 2018 at 8:04 pm

      Thanks Aparna!

      Reply
  7. SpongeBob meme says

    February 6, 2018 at 12:06 am

    I read this article and found helpful. Kindly elaborate this keyword i.e Speak to a Broker you mentioned in post.

    Reply
    • Alex Hamilton says

      February 12, 2018 at 7:00 pm

      Brokers work with you to understand your business and find you the right insurance policy!

      Thanks for commenting

      Reply
  8. Gaurav Gupta says

    February 4, 2018 at 3:08 am

    Your article is well written for the user. Your topic is really informative for user … I have gained some knowledge about the insurance policies. Nice work keep it up.

    Reply
    • Alex Hamilton says

      February 12, 2018 at 6:59 pm

      Great to hear,

      Thanks for reading and providing feedback!

      Reply
  9. aaron says

    January 24, 2018 at 4:28 am

    The article is so fresh and I have gained some knowledge about the insurance policies. Thanks for sharing Alex-keep up the good work!!
    aaron would love you to read ..Weekdays Batch Schedule – T.NagarMy Profile

    Reply
    • Alex Hamilton says

      February 12, 2018 at 6:59 pm

      Thanks Aaron,

      Glad you enjoyed my article 🙂

      Reply
  10. Alex Hamilton says

    January 23, 2018 at 5:48 pm

    Thanks for the comment, i’m glad you found value in my article 🙂

    Reply
  11. iprivatecar says

    January 22, 2018 at 4:27 pm

    Thanks for that kind of article. It helps me to know about professional indemnity insurance for business.
    iprivatecar would love you to read ..Hello world!My Profile

    Reply
    • Alex Hamilton says

      January 23, 2018 at 5:47 pm

      Thanks for the comment!

      Reply

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