Professional Indemnity Insurance (PII) is important for individuals who are engaged in some form of professional service or provide professional advice to their clients. PII is necessary as it protects an individual from the risk of getting into a dispute or being challenged by a unsatisfied client. It will provide an individual with professional representation, and pay for indemnity in case a client effectively sues for mistakes made as a contractor. These mistakes could be in the form of:
- Negligence in the form of incorrect advice, or misrepresented data
- Unpremeditated violation of copyright or privacy
- Loss of data and documents
- Contract breach, such as in the supply of software and hardware to a client
- Offense or defamation
If an individual opts to start working as a contractor, there might be chances that he / she is obliged to take some kind of business insurance. Usually, clients expect third party contractors to have necessary professional insurances and be covered for business legal responsibility and professional indemnity. Most umbrella companies in the UK make available blanket insurance cover for their employees, however, in case of a limited company contractor, the responsibility for taking the correct insurance policy is on the contractor.
Need of a Professional Indemnity Insurance
As per the requirements of industry bodies' regulatory, numerous business sectors need PII. These business sectors could include, but not limited to, accountancy, surveying, engineering etc. Professional individuals (such as business consultants, management consultants, and IT contractors) who opt to work on a contractual basis without doubt will need PII in order to be awarded a contract. Even if an individual is not officially obliged to have PII, without having it could cost thousands of pounds in reimbursement and additional legal charges to defend a claim. Irrespective of the size of a business, with no PII cover the financial position of an individual could be left susceptible if a claim is raised against them. Even though all professionals strive to provide exception service, there are possibilities of making a mistake; knowing that an adequate insurance is in place will give a professional peace of mind and keep the organisation covered for risk.
Who all need a PII
If an individual provide design, advice, or an addition professional service to a client, it is imperative to have PII. Professionals that may need PI cover encompass consultants, designers, IT professionals, dance teachers, fitness professionals, school professors and private tutors, and recruitment professionals.
Professional indemnity insurance for IT consultants
Whether an individual is a self-employed IT consultant or operates through a small consultancy firm, it is he /she who will be accountable for counselling clients on how to improve their systems. However, one small mistake (an unintentional incorrect guidance) may lead to extensive loss of sensitive data. If an individual makes a mistake, through PII for IT consultants, he / she can be protected. Through insurance, an individual may have up to £5.0mn cover for legal defence and compensation costs.
Professional indemnity insurance for advertising and marketing professionals
From creating digital marketing websites and writing content on the WebPages, to advising clients on how to manage their brand equity – all this involves a lot of sensitive information pertaining to copyrights and intellectual property. However, a small mistake, for example using a copyright-protected image without permission, could lead to a big compensation claim. With DNS’ PII guidance, legal defence and compensation costs could be protected. Marketing and advertising professional might cover:
- Graphic designers, interior designers etc.
- Copywriter and proof-reader
- PR professional
Professional indemnity insurance for contractors
As a contractor, the nature of work varies with each new assignment and since clients are relying on the wealth of knowledge of a contractor, he / she hold a trusted position in the eyes of the client. There might be a scenario when a PII is required by some client – hence buying cover can help make sure that the contractor is best placed for all the business opportunities that come his / her way.
We have been providing services in the UK to various clients and we also provide professional indemnity insurance to professionals, including:
- Management consultants
- Training consultants
- Estate agents – suitable for members of the National Association of Estate Agents
- Surveyors – complies with the requirements of the Royal Institution of Chartered Surveyors (RICS)
- Telecommunication consultants
Selecting the correct PI policy
- If an individual is contracting through an umbrella company, he / she will more often than not be covered by the scheme provider’s insurance policy. However, an individual must make sure that the policy covers their precise skill area, and to the extent predetermined in the contract
- If an individual is a limited company contractor, there are a number of providers who dedicate themselves to provide insurance products in such a scenario
- Clients will often stipulate their minimum level of required cover before a contractor can start work. Cover is available from £100,000 to £2.0m and more if required
- In general, a contractor will usually find the best deal by buying an ‘all in one’ policy, which covers business liability insurance, along with professional indemnity cover
- Under a standard contractor PI policy, most technical areas will be covered, however, a contractor may opt for a custom policy in case he / she is involved in an unusual or highly specialist work
- Along with other policies, a ‘retroactive’ policy is created to provide a contractor with cover from the date when he / she started contracting
- In addition to the above stated, a contractor may wish to take out ‘run off’ cover, which will protect them against past claims for several years after they decide to retire, or take a break from the contracting career
We work with Caunce O'Hara, an insurance specialist firm in the UK, and offer small-business with the most appropriate insurance packages. Insurance packages include: Professional Indemnity Insurance (PII) which protects business against any legal cost for professional negligence; Employer’s liability Insurance helps business pay for the employees in case of any mishap at work; Public Liability Insurance policy to cover against any damages asserted by members of public. Apart from these other products include officer’s liability insurance, personal accident and sickness insurance, office contents insurance, and product insurance and directors.