What is PI Insurance?

The purpose of this page is to help business owners, mariners and anyone involved with a company who might be interested in protecting themselves with professional indemnity insurance. To help you understand what professional indemnity or PI insurance is, what it covers, and why you might need it, we’ve written this helpful guide that will answer your most pressing questions.

What is Professional Indemnity?

Professional indemnity insurance is a type of business insurance that protects business owners, freelancers, and the self-employed from claims that their services are substandard. If the recipient is displeased with their work, any organisation that provides a professional service or gives advice could be sued. A consumer may claim that you were negligent, that you provided incorrect instruction, or that you made a costly error. Professional indemnity insurance can also be referred to as Professional Liability insurance and also Errors and Omissions.

PI insurance is designed to protect service-based businesses in the event of a disaster. As a professional, you take pleasure in your work, but if a problem arises, this coverage will cover the costs of resolving the situation, including legal fees.

What is the difference between public liability and professional indemnity insurance? 

The distinction between public liability and professional indemnity insurance is that public liability covers claims made by members of the public for accident, illness, or property damage, whereas professional indemnity insurance protects claims by clients for professional mistakes or carelessness.

Professional indemnity insurance and public liability insurance are both types of business insurance that cover compensation claims. The types of compensation claims they cover, on the other hand, can be considerably different.

Who needs professional indemnity insurance?

Professional indemnity insurance is not required by law, but professionals in specific industries should view it as one of their most important business needs. This is because some industries are far more likely than others to experience service-related disagreements. It is possible that certain clients will make this insurance a contractual obligation, or that your industry regulator would deem it necessary.

Industries that are likely to require professional indemnity insurance cover include:

• Accountants
• Estate Agents and Lettings Agents
• IT Professionals
• Media Professionals
• Town Planners
• Management and Business Consultants
• Clerk of Works
• Interior Designers
• Architects
• Mechanical, Electrical & HVAC Engineers
• Land Surveyors
• Design and Construct

What is Covered With Professional Indemnity Insurance?

A professional indemnity policy reimburses the insured for legal fees incurred as a result of financial damage caused by your company’s negligence, error, or omission in providing professional advice or services. This not only covers any legal costs but also compensation payments.

These are some of the things that professional indemnity cover from professionalindemnity.com protects you from:

Professional negligence
– making a mistake in your work for a customer or providing bad counsel to a client

Unintentional breach of confidentiality
– disclosing sensitive client information without permission

Defamation and libel
– making false comments about a competitor or client that are harmful to their reputation

Unintentional breach of copyright
– using an image on a website without permission

Loss of documents or data

Loss of money or goods that you are responsible for

Do I Need Professional Indemnity Insurance?

Although not a legal requirement, PI insurance offers protection to professional services from financial loss in the event of inadequate advice or service. Many professional bodies such as financial advisers find solace in professional indemnity policies.

How Much is a Professional Indemnity Policy?

Professional indemnity insurance cost can vary depending on the business and level of cover required. There is no such thing as an average professional indemnity cost but factors that will be considered when estimating your insurance premium include the number of employees, annual turnover, and the risks connected with your sector. A typical PI insurance policy from professionalindemnity.com can start from only £6.25 per month.

FAQs

Q. What is professional indemnity also known as?

• Professional indemnity insurance is also known as professional liability insurance, PI insurance and Errors and Omissions insurance.

Q. What does PI insurance cover?

PI insurance covers:

• Professional negligence
• Breach of confidentiality
• Defamation and libel
• Breach of copyright
• Loss of documents or data
• Loss of money or goods

Q. What kind of business needs professional indemnity insurance?

Businesses that tend to require professional indemnity insurance include:

• Accountants
• Estate Agents and Lettings Agents
• IT Professionals
• Media Professionals
• Town Planners
• Management and Business Consultants
• Clerk of Works
• Interior Designers
• Architects
• Mechanical, Electrical & HVAC Engineers
• Land Surveyors
• Design and Construct

Q. When would I need professional indemnity insurance?

• In some cases it can be a legal obligation for professionals to follow their organisation’s regulations in order to practice legally. Otherwise, it is needed to protect you in the event of legal action being taken against you or your business.

Q. Is professional indemnity insurance compulsory?

• Although professional indemnity insurance is not required by law, it is required by some regulators and professional organisations for some professions, such as solicitors, financial advisors, accountants, and architects. Some client contracts also require it.