A guide to professional indemnity insurance

Find out how you can protect your business


You might need this insurance if you offer professional services to clients or handle their data for them. Even the allegation of a mistake could cost your business. Evaluate the risks here.

Would I benefit from professional indemnity insurance?

  • Does your business give advice or offer consultancy services to organisations?
  • Do you handle data for clients?
  • Are you responsible for clients’ intellectual property?
  • Is your business in accountancy, IT consultancy, journalism, architecture, financial advice or engineering?

If you answer ‘yes’ to any of these questions, then you might consider taking out professional indemnity liability insurance.

Core cover

What are the benefits of professional indemnity insurance?
Professional indemnity insurance can protect your business against claims made by dissatisfied clients who challenge your work. A client might say that your negligence has caused their business to suffer a financial loss. They could say that you have made a mistake or offered incorrect advice.

Even if you haven’t been negligent, you could still face a claim from a client whose expectations have not been met. Professional indemnity insurance can cover you against not just the costs of putting a mistake right but also the legal costs involved in fighting a case.

Can you give me an example?
If you’re an accountant and make a mistake in the calculation of a client’s tax affairs and they were fined as a result, you would be liable for the cost. Or if, as a surveyor, you create inaccurate maps for a pipeline construction project and the engineer only discovers this after they've bought materials and started work, you could be liable for the expense incurred.

What do I need to consider?

Clients usually dictate the level of professional indemnity required Talking to clients to find out their expectations before you take on any work Cover of at least £50,000 – rising to £5,000,000 for some businesses A claim made for an incident in a previous year will not be covered unless you've kept your policy up Claims can be made for up to 6 years after an incident has occurred

Who needs Professional Indemnity insurance, and what does it cover?
Professional Indemnity insurance is mandatory for many professions, especially those in the finance, legal and construction industry. In addition, workers in IT, recruitment, media and management consultancies are just a few of the sectors where Professional Indemnity insurance can provide important protection, so if your business is providing professional services to third parties consider the following:

Do you have a duty of care to your clients or third party - regardless as to whether there is a contract in place
Do you provide consultations or advice to other businesses
Do you handle data belonging to a client
If you answered ‘Yes’ to any of these, Professional Indemnity insurance can help protect your business.

Professional Indemnity insurance protects your financial stability and helps ensure that the public doesn’t suffer uncompensated loss. Insurers typically offer cover starting from £100,000, we can help you by providing guidance on what level of cover you may require.

For example, if you are a Surveyor and construction begins based on an inaccurate map you drew, you could be liable for the materials and the expenses incurred as a result of the error.

Even if you didn’t do anything wrong, the cost of defending your reputation can be steep and Professional Indemnity insurance can make sure that these costs don’t harm your business.

For further information on the issues covered by this article, visit https://insurance.aon.co.uk/business-insurance/professional-indemnity

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