Imagine this scenario. You provide services for a client. Everything is going well until the final delivery occurs and suddenly, the client suggests you haven’t met the terms of the contract, then threatens to sue you. Could your business survive a lawsuit? Professional indemnity insurance was specifically designed for situations like these.
What Is It?
Professional indemnity insurance covers the cost of legal expenses and compensation to your clients to rectify any mistakes you may have made. In the event you were professionally negligent, you lost documents or data, you breached confidentiality, or you lost goods or money for which you were responsible, this type of insurance will cover you. It even provides coverage should defamation or libel suit occur against your company.
Some industries require companies to obtain this type of policy. For example, engineering and surveying firms commonly carry it, but others who aren’t required to get it should certainly carry it. Imagine, for a moment, your management consultancy business is awarded a large contract, but near the end of that contract, they find themselves not with the check they expected, but with a lawsuit instead? Professional indemnity insurance was designed for situations like these.
What to Consider
As you shop for the right policy to meet your needs, there are several things you’ll want to consider. While many people simply look at the price as an indicator, there are other things to factor in. Think about the size of your average client, or the specific client that has driven you to seek a policy. If it’s a fairly large client, you’ll want a bigger policy. After all, if they decide to sue you, and they have fairly deep pockets, it’s a legal battle that could drag on for some time, and you need to make certain you can afford the coming fight. Typical policies run between £50 and £5 million, and the rates vary by the size of the policy. Often if you reach out to others in your profession, you’ll be able to decide exactly how much coverage might be necessary.
Additional Insurance Options
Professional indemnity insurance doesn’t have to be bought alone. Instead, it can be part of a bigger business insurance package that can help to protect your company in the event of a lawsuit or another tragic problem that could cripple your income. For example, you may want to include stock insurance, tools cover, and other options. You may even be required to have certain types of insurance for your company. If clients are in and out of your building on a regular basis, for example, public liability insurance may be required. If you employ several individuals, employers’ liability coverage may also be a requirement. Fortunately, you can often roll these products into a single quote to help cover your company no matter what may come.
Indemnity insurance is one great way to protect what you’ve managed to build, and if you have considered it, it’s certainly time to do so.