Do you run a business which provides professional advice for a fee? Or maybe you handle sensitive information for third parties. If your business isn’t properly protected from professional errors and omissions, you could find yourself in hot water when things don’t quite go to plan.
But there is a solution. Professional indemnity (PI) insurance protects you and your business if your client believes you’ve been negligent. A PI insurance policy covers your legal costs and expenses to defend your claim, as well as any compensation which may be awarded. And the good news is that it doesn’t need to be costly.
Here’s are some of the key things you need to know about it.
Why would a contractor need PI insurance?
Professional indemnity insurance is a policy which covers a contractor in the event of a mistake or their negligence, which leads to financial losses for their client. For contractors, such claims could be financially crippling. It is therefore prudent to ensure that adequate insurance cover is in place, at all times. In many cases, contractors are required to hold professional indemnity insurance contractually. It is not uncommon for a contractor to have a clause in their contract necessitating that insurance be held, usually for the duration of the contract – sometimes beyond. Certainly, where this is the case, contractors should purchase an insurance policy, or they risk breaching the terms of their contract.
Which kind of businesses would benefit from PI insurance?
There is no legal requirement for businesses to hold PI insurance. However, some professional bodies require its members to do so. This means that for businesses such as accountants and solicitors, professional indemnity is, essentially, a compulsory insurance. For contractors, especially those providing specialist services or advice of a professional nature, PI insurance may not be compulsory. But it is just as important. This is because it protects them from substantial legal bills in the event of a claim.
Why choose PI insurance from Larsen Howie?
We have a comprehensive offering, covering a wide variety of contractor trades, at a very competitive price. With premiums starting at £144.00 per annum (including insurance premium tax) you will struggle to find more for less. Our policies are underwritten by some of the largest insurers in the world and have claims handled by top UK legal firms. Our offering is as good as they come.
What recommendations would Larsen Howie give for a new business looking to best protect itself?
If PI insurance is a contractual requirement, cover should be sought. And importantly, to the required limit of indemnity. Failure to do so could mean the terms of the contract are breached, leading to contract termination. Even where insurance is not a contractual requirement, contractors should consider getting it anyway. Claims can occur out of the blue, often without warning. In such circumstances, PI is the safety net, providing mind in the event that the worst does happen.
At Larsen Howie, we provide insurance specifically tailored to contractors. For more information about our professional indemnity insurance policies, click here.