If you are starting up a new business, and are providing professional services to clients, you may have considered taking out Professional Indemnity Insurance cover.
This type of insurance will cover you in the event that a claim is made against you as a result of work done for a client (negligence), as well as dishonesty, loss or damage to the client’s data, defamation, and any alleged breaches of the client’s intellectual property.
Some professions require cover to be in place, as will many contracts to perform contract work (especially for consultants and contractors). To give you peace of mind, you may also decide to take out cover if you provide advice to third parties.
You can get an online quote right away via our partner, Hiscox.
PI Insurance – Things to bear in mind
Before purchasing PI cover, there are several things you should consider:
1. Level of Cover – Make sure you are adequately insured. Unless specified by the terms of a contract to provide work or services, many industry experts would suggest that you take out as much cover as you can reasonably afford. Cover typically starts at around £100,000 up to £2m or £5m of cover.
2. Retroactive Cover – If you are concerned about potential claims which may arise from work you have done in the past, you might consider adding a retroactive clause to your PI insurance policy. This can cover you from the date you started in business. Clearly, you will need to declare that you have no reason to believe that any claims will be made against your past activities when you sign up.
3. Covered Activities – Many insurers will cover specific trades or professions (such as consultants, accountants, engineers, etc.) If you are not accepted initially using the standard application procedures, you may still be able to have a policy tailored to your needs by the leading insurers.
4. Run off Cover – As most PI policies run on a ‘claims made’ basis rather than ‘occurrence’ basis, you could potentially be liable for claims from past clients long after your PI insurance policy has ended. Run-Off cover will protect you against this kind of eventuality.
5. Limitations – Most policies will have a maximum turnover threshold (£500,000 or £750,000 are typical examples), and will only cover businesses which employ up to a certain number of employees (5 or 7 are typical examples). You should be made aware of these conditions during the application process.
Where can I buy PI cover from?
You can get an online professional indemnity insurance quote from our long-term insurance partner, Hiscox, by simply clicking here.
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