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Professional indemnity insurance information

This page relates to our professional indemnity insurance product.

What is Professional Indemnity insurance?

It is insurance for a business that protects its financial interests and reputation in the event of a claim by dissatisfied clients. Even the most respectable companies can find themselves in a dispute, and everybody makes mistakes. Professional indemnity can help cover you in the event of intellectual property rights infringement, damage or loss of someone else's documents, dishonesty by employees and negligence in your professional field.

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How much cover do I need?

No two businesses situations are ever the same, so there is a variety of cover levels to suit every need. As professional indemnity insurance is so important the best advice is always to buy as much cover as you can reasonably afford.

It is often the case that clients require you to have a minimum indemnity limit before they will let you do work for them. What this limit is depends on the service you provide, it is best to consult your clients before buying professional indemnity insurance. For work related to most UK government departments, you will require at least £5 million of cover.

Another factor worth considering is retro-active cover. This covers you for work already completed, should a bug or defect suddenly come to light. You will be asked whether you want retroactive cover when getting a quote on our website.

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How does professional indemnity protect me?

Professional indemnity covers...

...mistakes in a service provided by you that leads to a dispute with a client. Your policy will defend your claim in court and then, if you lose, you will be covered for any damages due up to the level of cover you bought.

...any costs for fixing a mistake made on your part, made to avoid a larger claim being made. Avoiding potentially more expensive and time-consuming litigation.

...you if you lose or damage any clients’ documents or if one of your employees are involved in the theft of a clients’ money.

Professional indemnity insurance also protects you against:

  • Negligence
  • Breach of professional duty
  • Breach of a duty of care
  • Infringement of copy of intellectual property rights
  • Breach of confidentiality
  • Libel and slander
  • Loss of documents

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How long should I cover myself?

It is especially important with professional indemnity to make sure you are properly covered. Professional indemnity claims can spring up at any time, either during new work, or on work previously completed suddenly revealing a fault/error.

One important aspect to consider with professional indemnity insurance is to keep yourself or your business covered for a 'run off' period after you finish trading or retire. This is because there can be a delay before a claim is raised, for example, it may take a long time for a defect in a building or a bug in some software to have any effect on your client. Therefore you need to be covered both while the work is being done and when a subsequent claim is made.

Due to this, it is important to take advantage of retro-active cover when switching insurance companies/policies. When you take out a new professional indemnity insurance policy, in most cases, you can back date the start of cover to the end of your last policy. This ensures you are covered continuously for your work.

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What difference does the excess make?

The most immediate difference changing the excess value makes is reflected in the price of the quote. If you have a bigger excess, the total premium will be lower, and if you have a small excess the premium may be slightly higher.

The excess is the amount that you will contribute to a claim on your insurance. This is standard practise and all insurance policies have excesses. On our other products this is a fixed amount, but with our professional indemnity insurance, the excess is adjustable to help you tailor your policy exactly to you needs.

If it is likely that any claim you might make will be small, it is better to have a smaller excess, if your excess is greater than the total cost of the claim, you will not receive any insurance pay out. If a claim you might make is likely to be a big one, you might want to consider a slightly higher excess, this means you would pay more in the event of a claim, but will enjoy lower premiums overall. If you are unlikely to claim on your insurance, higher excesses will again mean lower premiums, but if you do have to claim, you will face a higher personal pay out.

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