7 December, 2015
10 Reasons To Have Professional Indemnity Insurance
You need professional indemnity insurance, or PI as it’s also known, if you are an expert, a specialist, give a professional service, or advice, in fact any business where the quality of your work could be called into question. Here are 10 ways in which this cover can protect you.
Here are AXA’s 10 reasons to have Professional Indemnity Insurance
1. Breach of professional duty and claims costs
PI will pay to put things right if a claim for negligence is made against your business. If you are alleged to have provided poor advice or made a mistake, perhaps some of the photographs you took for a client’s wedding were out of focus, PI insurance will pay for your legal defence costs and any compensation you are legally liable for.
2. Breach of confidentiality
If you are party to a client’s secret information, perhaps as an accountant, and you unintentionally let slip the turnover of a client’s business, your business could face expensive legal fees and compensation claims if you are found to be in breach of confidentiality.
3. Bodily injury arising from breach of professional duty
When you run a business and you are dealing with people, accidents can happen. For example, a hairdresser could cut somebody with scissors, or a dance teacher could cause injury to a pupil by not showing them how to warm up properly. If your business activity causes injury to anyone other than an employee and you are found to be negligent, then PI will pay compensation to the injured party.
PI will only cover claims that relate directly to the business activity. It won’t pay compensation if somebody is injured because you accidentally spill hot water on somebody while making tea. This would usually be covered by public liability insurance.
4. Court attendance costs
Court costs can be crippling to a small business, so PI will help you to defend a claim in court. It can also pay for you to be there by paying expenses for each working day that you need to be in court.
PI can help to protect your business from compensation and legal costs associated with defending a claim if someone feels that your business has made a written or spoken statement which could affect the public’s perception of them.
6. Dishonesty of employees
When you took on employees, no doubt you did your homework and asked for references. Sadly, this isn’t always enough to guard against dishonesty. Fraud or dishonesty by someone working for you can be very costly too, and not just to your reputation. PI will cover your legal and compensation costs if a civil liability claim is made against your business.
7. Infringement of copyright
These days, businesses go to great efforts to stand out from the crowd, perhaps by producing videos for YouTube accompanied by music, or enhancing their website and social media activity by using content. But if you unintentionally use legally protected intellectual property, such as brand names, music or copyrighted information, without permission, you could run into trouble. PI will pay your legal costs and compensation if a claim is made against you.
8. Loss of documents
Perhaps you’re a tax consultant and keep your client’s documents in your home or office, or you store information electronically. What would you do if the documents were lost or stolen or your computer suffers from a virus and you lose data? It can be difficult and expensive to replace printed documents or electronic data. PI will cover the cost of replacing or restoring any client documents in your care which are lost or damaged.
9. Cover for previous work
Claims relating to past work can have a serious impact on the future of your business. Some PI policies give many businesses the option to choose a date in the past to protect previous work. So, if a new claim is made while your policy’s in force against work carried out from the date you choose, you will be covered.
10. Cover for previous work – after your business stops trading
If you’re retiring or shutting up shop and your PI insurance expires, you will still be liable for claims relating to past work. This could leave you seriously out of pocket just when you want to put your feet up. For this reason, it makes sense to purchase run-off cover. As time passes, the risk of a claim reduces, so your policy may get cheaper each year.