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Professional Indemnity Insurance
Professional indemnity insurance, often referred to as PI insurance, is a vital shield against potential financial setbacks arising from claims related to negligent services or advice provided by businesses or individuals. This insurance is a cornerstone for professionals who offer their expertise, knowledge, and guidance as part of their work.
Do I Need Professional Indemnity Insurance?
If you’re self-employed or work for a company where your professional expertise is essential, professional indemnity insurance is a wise consideration. Some of the popular professions we cover include:
IT Contractors
Including IT Consultants, IT Contract Managers, Software Developers, System Architects and more.
Business Consultants
Including Business Consultants, Business Analysts, Business Coaches, Project Managers and more.
Web Developers
Estate Agents
Including Estate Agents, Marketing Consultants, Administration Service Providers and more.
Engineers
Including Electronic Engineers, Civil Engineers, Mechanical Engineers, Design Engineers and more.
Financial Consultants
Including Financial Accountants, Financial Administrators, Financial Analysts and more.
Many other businesses, including oil and gas contractors, HR contractors, marketing contractors, recruitment agencies, accountants and public relations firms also opt for professional indemnity insurance to safeguard themselves against potential claims.
What Does It Cover?
Professional indemnity insurance safeguards you from claims filed by clients or third parties due to losses or damages resulting from negligent services or advice you provided. Remarkably, these claims can be raised even if you provided your services or advice for free.
Important Coverage Details
Professional indemnity coverage typically operates on a claims-made basis. This means your insurer will protect you only for claims filed during the policy term. Claims filed after the policy’s expiration, even if the incident occurred while the policy was in effect, will not be covered.
For example, if an incident occurred in 2011 while you had professional indemnity insurance, but a client files a claim in 2012 after your policy has lapsed, your insurer will not cover that claim.
When you decide to cancel your professional indemnity insurance, such as when you retire or change professions, it’s advisable to consider obtaining a run-off policy. This extends coverage to protect you against new claims made after your professional indemnity insurance expires. These new claims can be made up to six years after an alleged negligent act.
If you’re switching insurers, a run-off policy ensures protection against new claims for incidents that occurred under your previous insurer. Alternatively, your new insurer may agree to cover claims related to previous incidents. Always inquire about these options when changing insurers.
Purchasing Professional Indemnity Insurance
You can acquire professional indemnity insurance directly from an insurer or through a specialised broker affiliated with the British Insurance Brokers’ Association (BIBA). The amount of coverage required and the premium cost depends on your occupation, the number of employees and your turnover.
Some professional bodies and regulators stipulate minimum coverage requirements for their members. If you aren’t part of a professional body, it’s advisable to consult your recruitment agency and the clients that you work for regarding their contractual requirements and expectations for your coverage.
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