What is professional indemnity insurance and why is it necessary?

We live in a world where compensation claims have entered the popular psyche. This puts the individual and more prevalently the business owner at great risk of being sued. Some of these claims may be entirely justifiable due to gross professional negligence whereas others may be more innocuous; the point is that they all need to be legislated against in terms of a decent Professional Indemnity Insurance policy.

When it comes to Home Insurance we tend to legislate against the tangible; loss of property, damage to fixtures, theft of goods etc. Business Insurance is quite different as it often needs to insure against far less tangible consequences.

A successful business will have a constant customer/business transaction occurring and because your business is so much in the public realm it is increasingly exposed to legal claims. Some of these may come in the form of trips and slips – covered by Public Liability or Employer Liability Insurance – but many may come from far less tangible sources where Professional Liability Insurance is the key.

Whether you consider yourself a financial service, a designer, a therapist, a solicitor, or any business area that provides some form of advice or professional service, you’ll need Professional Indemnity Insurance. In some businesses this is a mandatory requirement but in all businesses it’s advisable.

You could provide a client with bad or negligent advice that will make a claim against you for; you may lose a client’s data or property; you could breach confidentiality or copyright – all of these things are examples of a time where Professional Indemnity Insurance would prove invaluable.

Policies at a leading provider like Endsleigh Insurance can range in value from £50,000 to £2million which should serve as a warning to the potential costs of a successful claim. The cost of a decent comprehensive policy can be as little as £5 a month, the decision to take on Professional Indemnity Insurance therefore appears a simple one indeed

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