Who Needs Professional Indemnity Insurance, and Why?
There is a range of business insurance policies available, including public liability insurance (to protect you and your business if you were sued by a member of the public for personal injury or damage to property), employers’ liability insurance and professional indemnity insurance. There are many more policies besides, and which type of insurance cover you choose will depend on your circumstances, the type of business you own and the sort of liabilities that you’re likely to incur.
Professional indemnity insurance is what you need if you offer professional advice or services, such as Will-writing, accountancy or bookkeeping. If your advice or services ultimately lead to a client losing out financially, they may try to prove that you were negligent and therefore liable to pay compensation.
Let’s take the example of a Will-writer who fails to check that the Will they have drafted has been properly signed and witnessed. Several years might pass before the problem comes to light (possibly when the client dies and his potential beneficiaries realise that they’ve lost out). Even though you can normally only be sued if an application has been sent to court within six years, Will-writing is a special case and applications can be made to sue a Will-writer for an indefinite period after the Will was written.
The Will-writer, if uninsured, would have to pay for their own legal fees (which could add up to thousands of pounds) and if the court made an order against them they would also have to pay an amount of compensation plus the legal fees incurred by the beneficiaries or estate. Even if the court finds that there isn’t any evidence to prove negligence, or that the case has been brought when there was no grounds to do so, the Will-writer would still have had to have found the money to pay their solicitors throughout the case – and they may never see that money again if the beneficiaries or estate lack funds to repay the Will-writer.
So even if you’re very, very careful and diligent in your advice and services, it is still possible that you could lose a lot of money simply by having a case brought against you – even if you ultimately win.
And then there’s the time that you’d have to dedicate to fighting your case: all those appointments at court; all that time spent going through your records to be able to argue your case, not to mention the time you’d spend worrying about it all. That time could be better spent actually getting on with running your business and earning money. If you have professional indemnity insurance in place at least you would be able to access top solicitors and even claims handlers to sort out your case and take the strain off you.
This type of business insurance is important right from the start, so you should start shopping round for competitive quotes even if you own just a small business or a start-up business. Having adequate insurance in place will ensure that a claim made against you won’t be an end to your business and will allow your business to continue to grow.