Professional Indemnity Insurance


Professional Indemnity Insurance is legal for some businesses, not applicable to others and recommended for those in between.
In essence, it protects business whose product is not tangible, but is either a service or an intellectual commodity.

The institute of chartered accountants also have guidelines, but rather than a fixed sum, the figure to cover yourself against a claim for is based on the size of your individual business. Their calculation states that the minimum an accountant should take out PI for is two and half times the income brought in by fees, or fee income x two hundred and fifty percent.

Professional Indemnity is not just for accountants and financial advisors, however.
If your business is to give other people advice, such as a designer or architect, then you need to cover yourself in case there is an issue when your design is realised.
And this is not just insuring against fatality or injury. If, during the course of construction of your plan or design, it is proved that there are faults, rectifiable or not, the designer is liable for the expense of materials and labour invested up to that point. If the whole project is to be scrapped, your incurred costs can be business-threatening, so it is indeed advisable to insure against this eventuality.

It is generally accepted that, by the nature of this policy lending itself to professionals within their field, that not every business needs this type of cover. However, some more aware staffing agencies and call-centres are starting to incorporate some degree of PI cover as their business models change with the times.

Professional Indemnity Insurance is an add-on to any of your usual policies, such as PLI and ELI, and is rarely incorporated within those two main types of cover. However, it is worth asking the company with whom you have these basic policies with, as you are more likely to get a preferred rate for this ‘professional’s’ insurance as an existing policy owner.

And finally, have a risk-assessment plan in place. Some companies may not insure you at all, if you don’t. But, if you can prove you have most eventualities covered, you will appear a safer bet with your chosen provider.

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