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Professional Indemnity Insurance - Advice
If you’re running a small business, you may well have been advised to take out professional indemnity insurance. So what is it, do you really need it and how do you go about getting it?
Professional indemnity insurance is insurance that protects your business from claims from dissatisfied clients. Such claims can be extremely damaging to the reputation and finances of your business – hence the need for insurance.
For example, your business could be exposed to:
- Negligence: or breach of duty of care.
- Intellectual property: infringing on others’ copyrights or trademarks.
- Loss of important documents, data or commercially sensitive information which belongs to your clients.
- Or dishonesty - liabilities arising from the theft of your clients’ money or possessions (i.e. whether this is real or not).
Professional indemnity insurance should cover you if you make a mistake in the professional services you have provided that leads to a dispute with a client. Your policy should be able to support you through to legal action as necessary and should also cover your costs for any damages you then become liable for if you lose the case. Of course, as with all insurance policies, it’s vital to get a clear understanding of exactly what your professional indemnity insurance is or isn’t covering – and the exact level of cover your business is insured for. Your insurance policy should also cover you for the cost of rectifying any mistake on your part, so avoiding a larger claim being made - and for the loss of or damage to any clients’ documents in your care.
All businesses are different, so it’s essential that you get a policy that fits with your individual needs. You know the realistic risks to your business better than anyone else, so don’t be drawn into paying needlessly for insurance. Only buy as much cover as you can reasonably afford.
As with all matters affecting your company’s finances, it’s always best to get expert business finance advice from practitioners with many years’ experience. There is further advice about professional indemnity insurance here.