Professional Indemnity Insurance: The Ultimate Guide in March 2024
If you are a freelancer or business owner, you will know the importance of professional indemnity insurance. It’s a basic form of protection that can safeguard your business at a time when it needs it the most. However, not everyone knows what professional indemnity insurance is and how it can help you. Let’s take a closer look at professional indemnity insurance and how it can benefit your business.
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
Below is a useful table about popular insurance companies in the UK based on what they offer and their Trustpilot rating:
What Does Professional Indemnity Insurance Cover?
Professional indemnity insurance, or PI Insurance as it is commonly known, protects freelancers against negligence claims made against them while working on client jobs. It protects your business against losses that can be incurred due to negligence or other errors during a job.
Professional Indemnity Insurance: Why Do You Need it?
There are many scenarios where a freelancer may be held liable for damages due to negligence.
A few of the most common examples include:
- Making errors in a client’s website code, causing the website to crash or malfunction.
- Missing deadlines or failing to deliver specific parts of a job on time.
- Coding an e-commerce site that is vulnerable to cyber-attacks or hackers.
- Making errors in tax returns and getting clients audited or fined for it.
Professional Indemnity Insurance: What Does it Cover?
Professional indemnity insurance mainly covers losses that may be caused due to an incident.
The main types of claims covered by PI insurance are:
- Loss in scope arises from work not being completed because it was finished improperly.
- Loss by delay – Loss if a project is delayed due to an error on your part. This can include missed deadlines and missed milestones.
- Loss due to wrongful conduct – Loss arising from wrongful conduct during the job, such as theft, breach of contract and willful misconduct.
Many insurance providers offer the option of covering any extra expenses that may arise if a PI claim occurs. Some even go as far as covering basic legal fees and any other damages that may be incurred due to the claim.
Professional Indemnity Insurance: Things To Consider
You need to consider several other factors before you purchase your own PI Insurance. Some insurance providers may request that you have letters of recommendation from clients who have used your services and have been satisfied. There are also insurance providers who require that you have no criminal record. If you do, they will consider this when determining how much they are willing to pay out in the event of a claim.
PI Insurance is a type of business insurance that any insurer can deny, not just because someone doesn’t want you as a customer or because they’re uninterested in keeping your business. You can be denied because you lack or don’t meet specific requirements. You should be wary of this if you are under the impression that PI insurance is unnecessary for your business to operate.
A claim under professional indemnity insurance generally requires that the client gives you a notice period before filing a claim. This can vary from three months to a year, depending on the type of claim. This is called the notice period.
Professional Indemnity Insurance: Do You Need it?
Everyone needs professional indemnity insurance. This is especially true when you are a freelancer working on a variety of jobs that require different levels of skill and knowledge. You might be working as a website designer, photographer, builder or carpenter. You may be doing part-time work for your own business, and you may also be working for other people. All these things can cause different types of claims, leading to huge losses for your business.
It’s unsafe to assume that you will not be involved in a claim. You could be working on a job that involves construction, where your client is planning to renovate a building. This could cause an injury to a worker if the platform you are working on collapses. You could also be operating machinery that causes an injury to someone while they are nearby. These are all scenarios where you can contract an injury or get sued because of negligence.
What Does Professional Indemnity Insurance Cover? To Conclude
Therefore, if you are doing freelance work or operating your own business, you must get professional indemnity insurance to protect yourself from such claims.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Is Professional Indemnity Insurance a Legal Requirement?
How Much Product Liability Insurance Do I Need?
Is Employers’ Liability Insurance a Legal Requirement?
Remember to Compare Your Business Costs is here to help your business every step of the way from business advice, or saving you time and money on your business purchases such as:
Ally Cox is a dedicated Copywriter and Blogger for CompareYourBusinessCosts.co.uk. In under two years, the platform achieved the esteemed accolade of ‘Website of the Year’. Since its award-winning debut, Ally has been instrumental in fostering organic growth for the website, expanding its offerings to encompass comparisons across a diverse range of over 20 products to help serve all your business needs.