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Professional indemnity insurance offers cover for businesses that provide advice, services, or expertise to clients. It protects against claims of negligence, errors and breaches of professional duty.
It covers legal costs, compensation payments and damages awarded to clients who claim financial loss due to your professional advice or service.
Businesses across various industries, such as consultants, architects, IT professionals, accountants and legal advisors can benefit from professional indemnity insurance. For example, an accountant could be sued for errors in financial reporting that result in client losses.
Overall, this type of insurance offers peace of mind. Whether you are a sole trader, a start-up or a large corporation, this insurance covers the risks within professional services.
Professional indemnity insurance is a type of business insurance.
It helps protect you against the cost of being sued if your company financially damages a client.
Negligence on your part that damages a client financially or reputationally
Substandard work you produce that doesn’t meet standards agreed at the outset
Loss of data, documents or information you’re entrusted with
Unintentional copyright infringement that’s found to be your fault
Dishonesty and fraud, as intentional damage done to a client isn’t covered
Injuries or damage to property done to a client. Public liability insurance may cover you for this
Fines or penalties you incur as a result of illegal practises or those that go against a regulator’s rules
Intentional breach of confidentiality that damages a client
Finding the right professional indemnity insurance can feel like an overwhelming task, but we’re here to help.
Whether you’re a sole trader, start-up or an established business , we’ll have a suitable quote that’ll safeguard your business from unexpected events. We understand the emotional toll that potential risk and uncertainties can bring to business owners, and our mission is to alleviate that worry.
We work with our partner, Simply Business, to provide tailored insurance quotes. So you can focus on what matters - growing your business.
It’s worth thinking about. Unlike other types of business insurance, there's no law stating that businesses have to have professional indemnity insurance.
But, some trade bodies and regulators insist their members have it in order to operate, so you may need it regardless of the law.
Professions where this applies include:
Solicitors - The Solicitors Regulation Authority insists its members have at least £2-3 million of cover.
Architects - The Royal Institute of British Architects requires all RIBA members to have cover.
Surveyors - The Royal Institution of Chartered Surveyors require all members to have cover in place.
Construction management professionals - The Chartered institute of building asks that all its members are fully covered.
How much cover you’ll need depends on your business. Your services, size of your clients and the possible financial impact of negligence in your professional services can affect how much cover you’ll need.
Think about the risks associated with your business and then explore the different options within professional indemnity insurance. Generally, cover ranges from £50,000 to £5 million for professional indemnity insurance.
If your business provides professional advice on things like IT or finances, you run the risk of that advice causing a client harm. If it does, they may claim against you. Professional indemnity insurance could help you cover the costs of that claim.
Whether you design physical or digital products, you could be sued if those products are defective. Professional indemnity insurance can help you cover the cost if a negligence claim is brought against you by a client.
If you provide legal advice, and that advice turns out to be incorrect or harmful to a client, you could be sued for damages. Professional indemnity insurance could help you cover the costs of defending a claim if you’re taken to court.
If you provide professional services like copywriting or computer coding, you could be sued if a client isn't happy with the work you produce. Professional indemnity insurance can help you cover the cost of legal action taken against you.
There’s a variety of things that can affect how much you pay for your professional indemnity insurance.
These include:
The size of your business. The more clients you deal with, the higher the chance of something going wrong.
Your clients' turnover. The more they make, the more damage you could do to them if something were to go wrong.
The type of business you have. Some run a higher risk of damaging a client than others.
The amount of cover you take out. The more your policy covers you, the more you’ll pay for it. Professional indemnity insurance usually provides between £50,000 and £5 million of cover for your business.
Your claims history. Usually, businesses who have claimed in the past are seen as riskier to insure by insurance providers.
Simply Business is one of the UK’s best known business insurance providers, and the quotes you'll get from us are provided by them.
Simply Business has served more than 3 million businesses since 2005. They’ve helped everyone from sole traders to large, multi-site operations find the right cover at the right price.
They’re regulated and authorised by the Financial Conduct Authority too, meaning that everything they do is out in the open. Just like every other partner we work with, you can rest assured you’re in safe hands with Simply Business.
Get a quote today and find the cover you need in minutes.
This type of cover works in a similar way to employers’ liability insurance. It can help protect your business against claims made by members of the public. So, if you own a building firm and a loose scaffold pole falls and hits a passer by. Or, if you run a cafe and a delivery person slips on your wet floor you could be held liable. Public liability insurance is there to help you cover the cost of any compensation and resulting legal fees you’re ordered to pay in these situations.
If an employee injures themselves on the job, your business could be held liable for medical fees, loss of earnings and more. Employers’ liability insurance can help cover the cost of any claims your employees bring against your business. It’s a legal requirement for most businesses with employees, and carries a heavy fine for businesses found without it. But there are exceptions.
This protects your business if you work independently. It's a mix of business insurance policies that can protect you against business-related risks. This includes things like liability claims, business interruptions and health issues. You can often tailor the cover to include the policies you might need for your line of work. That includes public liability, employers' liability, professional indemnity, income protection and cyber insurance.
This depends on the details of your policy.
Professional indemnity insurance typically covers misconduct claims for work you do while your policy is active. This means that if a claim is brought against you for work done 6 months or even a year ago, as long as you were covered at the time, your policy should pay out.
Some policies will also cover you ‘retroactively’. With retroactive cover, you’re covered for work you did in the past, even if you didn’t have insurance in place at the time. This can be useful as claims may not be brought against you for some time after the work you did was completed.
Policies with retroactive cover will normally come with a cut off period. Work done before this period will not be covered. They also tend to be more expensive than other policies, so bear this in mind.
It’s a good idea to get professional indemnity insurance as soon as your business starts offering professional services to clients. If you can, include it in the initial setup of your business.
Professional indemnity insurance is not a legal requirement, but it is good practice as it offers peace of mind and financial protection. You might also find that potential clients ask if you have this insurance before signing up for your services.
Yes, professional indemnity insurance is generally tax deductible as a business expense. The premiums you pay can be claimed as an allowable business expense, reducing your taxable income.
Page last reviewed: 28/06/2024
Reviewed by: Alex Ryde
Confused.com Business Insurance is provided by Simply Business. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London EC2V 7NG. Our service is free and compares a range of trusted household names. Confused.com is an intermediary and receives commission from Xbridge Limited which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don't promote any one insurance provider over another.
