Professional Indemnity Cover Explained

If your business activities involve consultancy, design work or you provide any professional service, then you may need professional indemnity.  Professional Indemnity Insurance covers your business against a potentially crippling claim that may also damage your business' reputation.  A third party could claim that a professional mistake, omission or negligent act has damaged their business, when you had a professional duty of care towards them and their business interests.

If your business activities directly affect another person or their business, for example marketing or financial advice, that results in third party injury, damage or loss you are at risk of claims for ‘business injury'.

Below are some of the danger areas that professional indemnity insurance covers:

• Loss of data or documents - damaged, lost or stolen data and documents belonging to your clients.
  
• Dishonesty - theft of clients money.
  
• Intellectual property - theft or infringement of someones copyrights, trademarks, broadcasting rights or passing your business off.
  
• Negligence - a violation of duty of care.

There is no set rule for professional indemnity, as it depends on the type of dangers your business faces in it's normal practice.  The only person who knows your business is you, so you know the sort of exposure it faces.

Sometimes your client will have a set minimum limit of professional indemnity they require before you can work with them.  This will all depend on the nature of their business, and the nature of services you have been contracted to provide for them, or it could just be a set limit for their company.

The level you require should be weighed against the value of the work you will be undertaking for your clients and the potential financial impact you could have on them, should something go wrong.  It is always advisable to buy as much cover as you can afford.  Our business insurance specialists can help you decide on the right cover for your business.