In the corporate world, it seems that there is only one main objective: please your clients. However, as much as everyone tries to do their best and be professional, mistakes do happen, error occurs, and accidents transpire. Due to this unwanted occasions that cause huge financial loss, liability claims are made against some companies. In this case, the only thing that could somehow aid the business is professional indemnity insurance. Here’s the principle behind this type of plan business owners should understand:

Who needs professional indemnity insurance?

Professions like Accountants, Lawyers, Architects, Surveyors and Medical professionals all legally require professional indemnity insurance to trade. In recent years it’s also become common for freelancers working in a wide range of industries like IT, Engineering, Design & Business Consulting to maintain policies, largely because clients now insist on PI cover being in place before they award contracts.

How does professional indemnity insurance protect you?

Professional indemnity insurance protects you against legal costs that may arise as a result of a client filing a lawsuit against you due to negligent actions. Even if the allegations are false, you still need to defend yourself and the legal costs can be crippling. A professional indemnity policy covers these costs providing legal power to fight for your status and reputation. If you are held liable, the policy will also cover any compensation payments.

How much professional indemnity insurance should you buy?

As the business owner, you are the only one who’ll be able to determine the exact answer to this question. A lot of clients will have mandatory limits of indemnity in their terms of business with you. The best advice we can give you is to buy as much cover as you can reasonably afford as if you are involved in a lawsuit, the last thing you need is to be underinsured whereby your legal fees exceed your level of cover.