Is Professional Indemnity Insurance A Legal Requirement?
A common question people ask is whether professional indemnity insurance, or PI insurance for short, is a legal requirement for professionals and businesses. The short answer is that you don’t need professional indemnity insurance by law. That said, just because you don’t strictly have to own it, we strongly believe that every business should still consider whether PI insurance is suitable for them.
If the worst should happen and your business makes a mistake that causes a client a significant loss of income, that client could then lay a claim against you. Having the right professional indemnity insurance can protect you in this situation.
It’s also worth noting that, though professional indemnity insurance may not strictly be required by law, most professional institutes do require their members to have some form of PI insurance. This will usually be through a regulatory body such as ICAEW or RICS.
What is Professional Indemnity Insurance?
PI insurance is a type of commercial insurance.
With any business, there is a chance that a mistake or bad piece of advice could cause a client to incur a financial loss. This could include anything from a simple oversight in providing a service that’s then got to be rectified, all the way through to breaches of confidentiality and data protection.
If this were to happen to your business, the client could potentially lay a claim against you to recover their losses. PI insurance will provide compensation towards the client for these losses, though it’s also worth noting that extra cover for legal expenses may be needed. At Higos, we can help identify which cover a business will need, and make sure this cover is included in their policy.
While on this subject, we should also add a word or two about public liability and professional indemnity insurance. PI insurance won’t cover you if a member of the public makes a claim against your business. Public liability cover, however, will specifically cover you for third party injury or property damage. That’s why it’s a good idea to have both, ensuring you have cover for every eventuality.
Do I Need Professional Indemnity Insurance?
As mentioned already, it’s not a legal requirement to have professional indemnity cover. However, it could be invaluable to your business and is always worth considering.
PI insurance is especially important for any individuals or businesses that provide specialist advice, service, or designs, or those who deal with data and intellectual property. These are often the businesses that are most at risk of making mistakes that could lead to clients experiencing financial losses.
At Higos, we have experience providing professional indemnity insurance to an array of professions, including accountancy firms, consultants, charities through to engineers.
Where Should You Get Professional Indemnity Insurance From?
When looking for any form of commercial insurance, it’s always best to speak to experts who can discuss your unique requirements and give you the best advice.
At Higos, we're certified by the Chartered Insurance Institute and work with clients across the UK from the smallest sole traders to large corporate entities. Using our experience and market knowledge, our professional indemnity insurance team are dedicated to ensuring you receive a high quality service no matter the size of your own business.
If you’d like to speak to a chartered insurance broker to help protect your business, don’t hesitate to get in touch with our team. Alternatively, you can fill out our call-back form and a member from our specialist professional indemnity insurance team will get back to you.