How Much Does Professional Indemnity Insurance Cost?
Professional indemnity insurance is a form of coverage offered by insurance companies that can protect a company from claims that they were negligent in the client’s services or made mistakes that lost the customers money. Whilst it cannot assist the company in fixing the reputation of the business which they failed, it can aid them in compensating the client for the finances they lost as a result. But how much does Professional Indemnity Insurance Cost?
For a medium-sized business, the annual insurance can range from £80 to 300. However, there is no way to provide a reliable average quote because professional indemnity insurance depends on the size of the business, the claims history, the annual revenue and the location. Most importantly, it depends on the level of cover your business needs.
Professional Indemnity Insurance Cost: High Cost and High Coverage
Employees that need a high level of cover of professional indemnity insurance pay a higher premium than those that don’t. For example, the most expensive cover would be for a construction worker like an architect because their services are fundamental to a client, and any minor mistake may set them back months and thousands of pounds.
The average annual premium can exceed £1,400 because it risks the insurer. It includes: any incorrect measurements, delays in construction or wrong choice of material as that can result in the client filing a lawsuit and demanding compensation, which is why at least £1 million worth of cover should be obtained.
Other professions that should consider the more expensive cover are lifestyle consultants and life coaches.
As their advice impacts a client’s health, one of the most personal and invaluable assets of a person, it may be worth having a higher level of insurance to comply with the higher risk of claims. For example, any acts of negligence like advising clients to adopt meal plans that are dangerous for their health or activities that may harm them could seriously injure the client and result in their hospitalization.
The consultant would be responsible for paying the expenses of this. Cover for a lifestyle consultant is approximately £175 annually, but this fluctuates depending on the size of the business and revenue.
Professional Indemnity Insurance Cost: Medium Coverage and Medium Costs
Some professions require less cover than the most progressive policies because they are not directly involved with clients that rely heavily on their services. These include companies that would still cause the client financial loss if they made a mistake, but it would not be detrimental. For example, a designer of any sort, an interior designer, is responsible for bringing to life the vision that their customer had and doing this in a fast manner, within their budget.
Suppose a designer made a professional mistake like picking out a different colour for painting the property than the client wanted or selected a piece of décor that was too expensive and meant the client now had to pay outside of the budget.
There is a chance of the client filing a claim in that case. Professional indemnity insurance would cover the costs of reimbursing the customer, but this would not be a huge payout. £50,000 worth of cover would be enough for a small designer business to purchase.
Other professions that would still find professional indemnity insurance beneficial but not much coverage are IT specialists and those involved with programming, designing and developing technology.
On average, workers in this industry pay £114 annually for this cover, providing them sufficient protection from claims that they made an error or were negligent in their work. Examples of this could include making an unintentional coding error but passing the work off as completed, leaving the client to deal with a glitch and implying that their work was below standard.
Similar accidents could include creative advice that may potentially cause the client financial loss, forgetting a deadline and being behind on the work, or using a similar concept to another company and receiving a claim of copyright.
Professional Indemnity Insurance Cost: Low Cost and Low Coverage
Some businesses do not require as much professional indemnity insurance or even none at all. Nevertheless, it is advised to obtain even the slightest level of cover so that the company is prepared in the unlikely event of a claim. Such professions include companies predominately involved with selling products, like supermarkets and small shops, or those within the food industry like cafés and takeaway restaurants.
Most insurance companies offer professional indemnity insurance starting from £50,000 worth of cover, which could be as little as £60 per year when searching for the cheapest insurance companies.
Professional Indemnity Insurance Cost: To Conclude
In conclusion, the cost of professional indemnity insurance varies significantly on the risk of your profession, the size of the business and the annual income.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
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