Once you’ve worked hard to set up your business, it would be silly not to protect it. Although it has many benefits, the main reason for investing in professional indemnity insurance is to provide a safety net in case of mistakes, covering legal costs or just generally as a backup. There are a few deeper details that you should understand, which could make a big difference if an unhappy client is trying to claim against you. Find out a bit more about it below!
Who Needs Professional Indemnity Insurance ?
Within many lines of business you are obliged to have insurance, and even if it isn’t a necessity, it is probably a good idea. This will be good for both your own security and also to reassure potential clients that you have all the correct paperwork in place. It is particularly important for business that are providing a professional service, handling data, giving out professional advice or wanting to protect their intellectual property to take out PI insurance. This is because it can pay for claims made against you for financial loss suffered by a client. The insurance company will generally pay out compensation when a client is accused of negligence, infringement of intellectual property rights or a breach of confidence. So, whether or not you are obliged to have it, it is a good idea to cover your back.
Mistakes Can Happen
Even the most professional of people make mistakes, and although you may do everything you can to avoid making mistakes, sometimes they happen. It could just be a seemingly minor day-to-day slip up that can result in people making a claim for negligence, which could end badly for you. To avoid this difficulty, professional indemnity insurance can be a great option.
For example, if there is a failure within the IT system that results in a loss of some of the clients data, which can be costly to retrieve, they may claim. Or, an employee may send an email to the wrong person containing inappropriate content. There are many things that can cause issues, and so by taking out professional liability insurance, you’ll be covered for any legal costs whilst defending the claim.
Make Sure It’s The Right Policy For You
Your business is unique, so it’s not always easy to know how much cover you’ll need or what is the right policy for you. Your cover can depend on many different factors. Before investing in insurance, it is crucial for you to find a policy that suits your business and what you are looking to get out of it. The type of insurance you’ll need will differ greatly between business sectors, so different cover will be required. For example, in the media, if confidential information was accidentally leaked prior to a press launch you’d definitely be needing cover.
To begin with, it might seem like the end of the world if a claim is made against your business, especially if you haven’t experienced it before, but if you have the right level of PI insurance in place it will help to fix things and take the pressure off leaving you to move forward with your business.