Professional Indemnity vs Management Liability Insurance
As a business owner or director, making sure you have the right kind of business insurance is vital. Not only for you, but for your business and your team as well.
There are many different facets and types of commercial insurance that help protect different aspects of your business. Two key types of insurance for businesses include professional indemnity insurance, and management liability insurance. We are often asked what the difference is between these two types, and how to know which kind of cover is right for you.
In this blog, we’ll be going over the differences between management liability insurance and professional indemnity insurance, what they cover, and how to know which type of cover is right for you.
What is Professional Indemnity Insurance, and why is it important?
Professional indemnity insurance covers you in the event that you suffer financial loss due to claims against you for breach of duty, negligence, errors or omissions on your behalf. For example, if you work with clients and made a mistake that a client deemed to be a breach of your duty, or negligent, they could make a claim against you.
If you are a business/individual that gives advice or provides a professional service where an error, omission, or act of negligence on your part could cause a detrimental impact to your client it is highly recommended you take out professional indemnity cover
How does this differ from Management Liability Insurance?
Management liability insurance, by contrast, specifically covers those in management positions (such as director, officer, or senior manager) from the effects of legal actions or claims against you.
Management liability coverage includes multiple elements under one policy, and with the right chartered insurance broker, can be tailored to your needs. Some of the individual types of cover that can be included are:
- Directors & officers liability
- Corporate legal liability
- Employment practice liability
- Kidnap & ransom cover
- Employee theft cover
Both professional indemnity cover and management liability protect you and serve as a safety net in the event of a claim made against you or your business. However, management liability insurance is designed to cover you against risks that might be outside ‘typical’ claims by your clients against you.
Which type of business insurance should you choose?
The type of insurance you should take out depends on the size and nature of your business, and the risks that you might face.
Neither professional indemnity insurance nor management liability insurance are mandatory types of cover for businesses in the UK. However, it’s widely recognised that having some kind of protection against yourself and your business in the event of a claim is a wise choice.
For Bespoke Insurance Advice, It Has to Be Higos
Not sure what kind of cover you should choose based on your business needs? Get in touch with our friendly expert commercial insurance team, and we’ll find the right for you. Whether that’s management liability insurance, professional indemnity insurance, or a combination of covers, we’re here to help. Just get in touch by calling your closest branch or call 01458 270323 for a free quote.