Whether you’re an accountant, a builder, an IT consultant, or a salon owner, professional indemnity insurance is something you should consider. Broadly speaking, professional indemnity insurance (PI insurance) protects you from legal action if a client sues you for either giving them poor advice or for failing to deliver an adequate level of service. Once upon a time it was only taken out by large companies, but with more and more people prepared to go to court to settle disputes all companies are now at risk.
In recent years PI premiums have been on the rise. In certain professions such as solicitors, lawyers, and surveyors costs have risen sharply, so much so that in the case of surveyors the government has been forced to pledge to underwrite its own scheme to keep it affordable. Tragedies such Grenfell have made insurers nervous and they are either refusing cover or charging extra for it.
Affordable professional indemnity cover is still available though. In this latest blog from Coversure Kidderminster, we’ll take you through the ins and outs of this important protection, telling you who needs it, why, and how you can save on cover.
We hope this will be of help, but if you would like some personalised advice, then please call the Coversure Kidderminster team on (01562) 822664 or email Coversure Kidderminster and the team will be only too happy to help.
What Is PI Insurance?
Professional indemnity insurance is a cover that protects you should the advice you give or the service your offer cost a client money or does damage to their business. As you can see from the following, there are a range of grounds under which a claim can be brought and these can be grouped as:
• The advice you gave was wrong
• The service you gave didn’t live up to their expectations
• Your business has lost their documents/data
• You/someone who works for you has said something online/in the press that is untrue/damages their business’s reputation
Given that most businesses now work online, use social media, handle data, or give advice, getting professional indemnity insurance is a wise precautionary move. Worryingly over 40% of UK small businesses don’t have PI cover, which is leaving them exposed in the event of a claim.
The following takes a more detailed look at the protection a policy can offer you:
• Breach of duty – a breach of duty is when you or your company fails to live up to the duty you have promised the client. Whether that’s by delivering below par advice or not providing a service that you’d agreed to, a breach of duty could cost you dearly. In some cases, if a claim is brought against you, you could be left personally liable for the costs and any damages. Professional indemnity insurance protects you against these costs, providing great peace of mind for a modest premium
• Civil liability – this specifically looks at the effects of advice or instructions rather than assigning fault with the initial advice. You’ll need civil liability cover if your advice leads to injury or illness as opposed to financial loss. If you complete consultancy work then this will be more relevant to you than, say, a financial advisor or lawyer
• Negligence – every professional has a duty of care to their client. This means they must act and deliver their services to a high standard, taking reasonable care to do so. Due to the Supply of Goods Act 1982, there doesn’t need to be a breach of a specific contractual agreement for you to be liable for negligence. As an independent body – such as a financial advisor – this would fall on you personally and could leave you with large legal costs and compensation claims to pay
• Contractual liability – if you sign a contract with another company and assume liability on behalf of them in your job role, contractual liability could be useful for you. This protects you if you’re held liable for failing to uphold the terms of a contract. This could affect both service-based and advice-based businesses and it could be key to protecting you
• Loss of documents or data – this both applies to losing documents and data or sharing data or sensitive information without prior consent. Whether you’re a solicitor, lawyer or data controller – such as a digital marketing consultant – you could be held personally liable for losing documents or data and face hefty penalties
• Defamation – if you make false or defamatory statements about a person or organisation, you could be held liable for damages. Particularly useful for those in the journalism industry or anyone that regularly makes statements via a public platform such as social media, PR, or online marketing
5 Tips For Cutting PI Policy Costs
Premiums are rising and cover is getting harder to find, but there are still ways to cut the costs of good quality PI protection:
1. Use a specialist broker and let them shop around for you – professional indemnity is a complex area. Many brokers prefer to steer clear of it so its important to choose one that knows the policies and who has the insurer relationships to find you the right cover at an affordable price. Coversure Kidderminster for example!
2. Start looking around for quotes early – in this market it pays to start your PI conversations early as your broker may need to spend some time getting the deal that’s right for you. As we’ve said, in some professions getting cover at all can be hard so give yourself time if you want to save money on the right cover.
3. Do what you can to avoid claims – your policy wording will give you a guide to what’s covered and the pitfalls you can face. Based on this you can take reasonable steps to avoid them. For example, if you’re a marketing agency then don’t trust a client’s social media account to an unsupervised junior. There have been many cases of businesses doing this, the wrong thing is said and the next thing you know is that you wind up in court.
4. Tell your broker about the things you are doing to reduce risks – if you’re investing time and money on risk management, make sure your broker knows about it so they can share them with insurers.
5. Have your broker review your cover – circumstances change, risks change, so make you have your broker review your cover. They may be able to reduce your premiums by reducing cover in certain areas while ensuring you aren’t left exposed in other areas.
Get Some Professional Indemnity Insurance Help
We hope this will help, but if you would like some personalised advice, then please call the Coversure Kidderminster team on (01562) 822664 or email Coversure Kidderminster and the team will be only too happy to help.