PI Insurance: 4 Things You Should Know
From the level of cover you need for your business to the types of claims that you can expect, we know that PI Insurance can get confusing! We’ve answered some of the most commonly asked PI Insurance questions - have a look!
What is Professional Indemnity or PI Insurance?
Professional Indemnity (PI) Insurance protects you and your business against professional mistakes or errors, which your clients believe they have suffered from.
It covers against both the legal cost implications of defending a claim (such as solicitors and barrister’s costs) and the financial damages, which could be due to your client as a consequence of the error.
Who needs it?
PI Insurance is a popular insurance for individuals or businesses that provide a professional service, give advice or handle client data and intellectual property. This could be anyone from accountants and architects to IT consultants and marketing professionals.
Why is it necessary?
Firstly, many professional bodies require you to have a PI policy in place. For example, the accountancy, architecture and surveying industries are typically obliged to have cover in place. So, when weighing up your next gig, make sure you know what is required from you by your professional body or regulator.
Even if it’s not obligatory, you may want to consider getting PI insurance due to the fact that many prospective clients feel much more comfortable awarding a job to someone that has the cover in place – just in case something goes wrong. It’ll reassure them, and will give you peace of mind knowing that if a mistake happens, you’re covered.
What level of cover do I need?
Depending on the affordability, the level of Professional Indemnity cover you purchase depends on two main factors:
The size and types of clients you’re dealing with
The level of cover you select should be enough to cover the financial loss that your client could suffer by using your services. Your governing body or association usually have requirements on minimum levels of Professional Indemnity insurance that they require (this is usually against your company turnover).
The type of cover
If the Professional Indemnity cover you buy is on an aggregate basis, then the level of cover purchased would need to be higher than if it was on an “any one claim” basis