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Professional Indemnity Insurance

What is Professional Indemnity insurance?

Professional indemnity (PI) insurance is a commercial policy designed to protect business owners, freelancers and the self-employed if clients claim a service is inadequate.

Any organisation which provides a professional service or gives advice could be sued if the recipient is unhappy with their work. A customer might say you were negligent, delivered the wrong training or made a mistake which cost them money.

Do I need professional indemnity insurance?

Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for thousands of pounds worth of legal fees and compensation payments – not to mention lost income from the time spent defending any allegation. You are likely to need professional indemnity insurance if:

  • You provide advice or professional services to your clients (including consulting or contracting)

  • You provide designs to your clients (such as working as an architect or design engineer)

  • You want to protect against allegations of mistakes or negligence in work you have undertaken for your client

  • You work as a contractor, consultant, freelancer or self-employed professional, and your client has requested you arrange professional indemnity insurance in order to undertake a contract

  • Your industry association/regulatory body requires you to have it

  • Professions that might need professional indemnity insurance include (but are not limited to):

  • Management and business consultants such as marketing consultants, training consultants and education consultants

  • IT professionals including IT contractors, consultants, programmers and developers

  • Technical and engineer contractors including CAD designers, project engineers and offshore oil and gas engineers

  • Recruitment agencies and recruitment consultants

  • Designers such as web designers, graphic designers and interior designers

  • Fitness professionals including personal trainers, dance teachers and yoga instructors

  • Teachers and tutors including private tutors

What does PI Insurance cover?

Professional indemnity insurance protects you against claims for loss or damage made by clients or third parties as a result of the impact of negligent services you provided or negligent advice you offered.  Compensation claims can be brought against you even if you provided a service or offered advice for free. 

What doesn’t professional indemnity insurance cover?

While PI insurance covers quite a few circumstances, there are also a few scenarios where you may not be covered.

You should refer to your policy terms and conditions for full details, but generally, PI insurance does not cover:

  • Fines and penalties

  • Any loss to your business that is caused by mould, pollution or asbestos

  • Injury to an employee

  • Injury or loss in a joint venture (only your products/services would be covered by your insurance, and not the products or services of a partner)

  • Circumstances that existed prior to when your cover started.

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