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Many individuals and businesses sell information and advice to their customers. Unfortunately, if that information is wrong or misleading, it can cause financial loss or other damage to their clientele. Claims for compensation can then cost thousands or even millions of pounds to settle. Instead, professionals and businesses exposed to this sort of risk will purchase professional indemnity insurance to protect them from financial disaster caused by a misplaced word or a slip of the pen.
Professional indemnity insurance – also known as professional liability insurance – covers businesses and individuals that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that may be published in the media. Professional indemnity (PI) can protect you if a client makes a financial loss because of fault in your work and then makes claim against your business. Trade associations, government bodies, public institutions, and major customers will often require proof of a minimum level of PI insurance before doing business with you.
If you offer knowledge, skills or advice to clients and customers – either as a self-employed individual or for a company – then yes you do. The potential cost of claims arising from any errors in the services you provide can far outweigh the cost of the policy. Typical cover will range from £50,000 to £5million, but the amount of cover you need will vary depending on your profession, your clientele, and the type of information and services you provide.
Firstly, some professions are required by their trade bodies or guilds to have professional indemnity insurance in place. This includes:
Secondly, many other types of business expose themselves to claim because their work is published in the media, provides industry-standard guidelines, or has legal and political impact. Businesses and occupations most at risk include:
Important tip: You can be held liable for bad or misleading information or services even if you or your organisation provided them for free.
Professional indemnity insurance is designed to cover a range of issues that may arise from the information, skills and services you or your business provides:
This is also known as ‘breach of duty of care’. Professional indemnity insurance covers you in the event that a client suffers loss or damage because of faulty advice.
To defame someone is to make a false statement or do something that harms their reputation or casts their character in a bad light. Journalists, authors, TV reporters and even some celebrities, such as stand-up comedians, are most at risk from this type of claim.
Covers you in the event that a client or customer claims they have suffered loss or damage because you have shared their confidential information without their permission.
Covers you from claims that state you have utilised copyright protected intellectual property (IP) – typically manuscripts, plans, drawings, patents, etc – without the original author’s permission. Note that you do not have to have re-used the IP for financial gain to be at risk.
PI protects you in the event that a client or customer claims they have suffered financial or other loss because you have lost or damaged their important documents through accident or lack of care.
Covers your business from liability claims made because of fraud or dishonesty by your employees or any sub-contractors, consultants and freelancers you have hired to work on a project.
Premiums for professional indemnity insurance can start at less than £8 per month, but costs will vary depending on your profession and the type of information, advice and services you provide.
All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Don’t let a slip of the pen, bad advice, or wrong information wrongfoot your business. Contact Swoop today to compare top-quality professional indemnity cover from different providers and to discuss all your business insurance needs.
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