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Professional indemnity insurance – how much cover do I need?

The question as to how much professional indemnity cover to purchase can be a difficult one and inevitably varies from one business to the next.

However, there are several things that you should take into account:

  • What is the largest potential claim you could face?
  • How many people could be affected by a mistake you make?
  • How many mistakes could you make for a client?

Assessing the largest potential claim

Assessing the size of a potential claim could be simple for some businesses, as they are able to specify the maximum level of compensation they will pay in their contracts.

However, these maximum figures could be challenged in court, especially if something goes severely wrong and the compensation is deemed to be unjust.

Some contracts will require you to have a certain level of professional indemnity cover in place, so it makes sense to buy a policy that will at least meet these limits.

How many mistakes could you make? and How many people could be affected?

Although it seems unlikely that you could make more than one mistake when working on behalf a client, sometimes it can be difficult to spot a mistake, which means that it is more likely to be repeated. For example, if a recruiting business neglects to check an applicant’s right to work in the UK, when recruiting multiple candidates for a specific project, such a mistake could occur multiple times over. This could lead to a single claim that involves numerous mistakes.

You should also consider the nature of the work that you do. If each project is completely unique, for example – advising on a large company restructure, then a mistake is only likely to occur once. However, if you advise multiple clients on implementing changes, such as compliance with Health & Safety regulations, misadvising clients could mean that you are faced multiple claims for the same mistake. While these claims might not be large, the volume could be and can all add up.

Defending yourself

Professional indemnity insurance does not just cover compensation; usually it will also cover the legal costs of defending yourself against accusations. Having this cover in place will also help to reduce the distraction to your business whilst managing the issue.

However unlikely it might be that you are to make a mistake, you could be accused at any time and the costs of defending yourself and protecting your business from the consequences could be huge.

If you offer professional advice and services it is well worth considering some degree of professional indemnity cover.

What type of claims could I face?

Here are some examples of the types of allegations that could be made against you.

  • Negligence – failure to take proper care over something
  • Defamation – making false statements
  • Beach of confidence – disclosure of confidential information
  • Dishonesty – Accusations of dishonesty e.g. theft of property

Professional indemnity insurance is a cost effective way of protecting yourself and your business against these allegations and also provides valuable peace of mind that in the event that someone makes a claim against you that your business can carry on as usual.

What else should I consider?

Professional indemnity premiums can vary from one provider to the next, so it is important to shop around for a competitively priced quote, but also to ensure that you choose a respectable and reliable provider that will put the interests of your business first.

As a specialist business insurance broker, Be Wiser Business Insurance is able to choose from a range of specially negotiated schemes from a number of leading providers, in order to find you the best value level of cover for your company from a provider that you can trust.

We appreciate that every business is unique, which is why our qualified and experienced staff listen carefully to your needs and make recommendations based on your circumstances. We are on hand to assist you with our expertise and knowledge of the business insurance market and to select the best policies.

If you’d like to find out more about insuring your business, or for a free no obligation quotation, please give us a call on 0800 042 0401.

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