Professional indemnity insurance (PII), or professional liability insurance (PLI) as it can also be known, is essential for any business which offers professional advice and expertise to other businesses? or individuals. If a client believes you’ve been negligent, PII will protect you against the legal costs involved in a claim.? If you don’t have PPI, you will be left to pay out, what could be huge sums of? money and? may well be enough to destroy any small business.
– Loss of documents or data.
– Making mistakes.
– Accidental breach of copyright or confidentiality.
– Defamation and liability.
– Loss of goods or money.
Although it is generally not a legal requirement to have PII, there are certain occupations which are more prone to these types of risk and for whom it would be advisable to take out this form of cover.? These occupations include
- Financial Advisers
- Business Consultants
- Creative Marketing or Media Professionals
- IT Professionals
The level of insurance a company is required to take out will completely depend on their circumstances. If, for example, the insurance is required for a specific contract, it is likely that the client will specify a minimum amount.? You must put yourself in the position of your client and place yourself in a worst case scenario to fully take into consideration any legal fees and losses your client may face should you may a mistake.This can then act as a good framework for working out how much you should cover yourself for.
As a general rule of thumb, the minimum level of cover should be approximately ?2m, but if your business deals with high risk data it is more likely you would be looking at around ?10m. Insurance companies will take this into account when they work out the best policy for your business along with factors such as what type of business you are, whether you have had any claims made against you in the past. the number of staff you employ and your turnover. Insurers need to assess how much of a risk you are to them before deciding how much to cover you for.
Policies will vary between each insurance company, but in addition to the standard cover you may find that some will also cover you for: libel and slander, dishonesty of employees, fidelity and previous firms and partners. Perhaps, more importantly is to be fully aware of what is not covered by PII and for which more specific insurance should be considered. These include:
– Bodily injury
– Property damage
– Property owners
– Insolvency or bankruptcy of the insured
– Uncontrollable circumstances e.g war, radioactive contamination, seepage and pollution
– Fines and penalties
– Extensions to the policy
– Date recognition.
Do your research and shop around to find a policy that best suits your organisation. The Law Society offers various guides and advice to help you understand your regulatory requirements and there are numerous comparison sites, which can work out an immediate quote to give you the good grounding to find the right policy.