Reasons you may need professional indemnity insurance

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Professional Indemnity is a specialised form of cover which could provide you and your business with financial protection against litigation brought about by clients who have suffered a financial loss due to recommendations or services that you have provided.

If through the course of your business you provide advice, specifications, designs or a service you may be considering professional indemnity insurance. This short guide sets out five key reasons why you might:

  1. Your professional body may require it

For most businesses, professional indemnity is not a legal requirement; however without professional indemnity insurance some professional bodies including the Architect Registration Board (ARB) may not recognise you as a member.

Their guidance states:

“You are expected to have adequate and appropriate insurance cover for you, your practice and your employees. You should ensure that your insurance is adequate to meet a claim, whenever it is made. You are expected to maintain a minimum level of cover, including run-off cover, in accordance with the Board’s guidance.

The need for cover extends to professional work undertaken outside your main practice or employment.

If you are an employed architect you should, as far as possible, ensure that insurance cover and/or other appropriate indemnity arrangements are provided by your employer.”

2. Your clients may expect it

When your clients are looking to hire a professional, be it an accountant, business consultant or electrical engineer they will undoubtedly look for professional credibility. This could mean looking at your qualifications, membership to a professional body and also checking whether you have insurance.

Having insurance may demonstrate to your customers that they are hiring a responsible and competent professional as it demonstrates your commitment to your profession and customers.

3. Pitching for public sector business 

If you are chasing work from local councils or public bodies then you may find having the right insurance in place is essential. Many tender processes will have criteria which includes having the appropriate insurances in place.

For many professional services, having professional indemnity insurance in place is a first step in the process of bidding for and winning public service contracts. Public sector organisations are unlikely to work with people without insurance as this could expose them to risk.

Therefore, making sure you’re covered for negligence, legal costs and any issues that could result in you being sued as a result of the work you have done, may be considered essential for winning this kind of business.

4. Protecting your reputation

Defending yourself and your business against claims may help to protect your reputation and minimise any damage. Without your legal costs covered you could find yourself in court defending yourself at your own expense.

5. Financially protecting your business

Professional indemnity can protect you and professionals employed by you for litigation brought against your business by your clients.

It may form part of your larger set of business insurances including but not limited to public liability & employers liability insurance, office insurance and commercial vehicle insurance.

Businesses of all sizes are vulnerable to litigation for all kinds of reasons and if negligence can be proved, then courts will usually award compensation and costs to the claimant.

If you are taken to court you will likely require good legal advice and representation and this could cost substantial amounts of money. Without protection you can leave your business vulnerable to significant legal costs.

Need a quote?

Just fill out the quick quote form on our professional indemnity insurance page, or give our UK based sales team a call on 08081686868.