Do I Need Professional Indemnity Insurance?
Professional Indemnity Insurance (also known as PII or Errors & Omissions Insurance)
has long been used by the traditional professions, such as Accountants, Solicitors, Surveyors and Architects, to give them protection should they be accused of making a mistake. Today there are an increasing number of professions that benefit from the cover and security offered by Professional Indemnity Insurance.
If your business provides advice, consultancy, design, training, testing, therapy or other professional services then the main risk to your business could be a claim against you for making a mistake, error or omission. The cost of the claim might be considerable but what will often be more expensive are the legal costs incurred in defending a claim. However, this is not the only risk, in our experience Professional Indemnity Insurance is just as often relied upon to cover the costs of defending a claim that is unjustified. It can be surprising how many claims are made by people who want to avoid paying a bill, who are trying to cover up their own mistakes, or who simply did not understand what they were asking for when they contracted you. Even if you are innocent these claims are expensive to defend against without insurance.
An example of recent claim we were involved in was for an IT consultant who had provided their client with a networked computer system and specialist software package. The client repeatedly changed their mind over what they wanted, with frequent amendments to the specifications. The client then decided that they no longer wanted to proceed in this direction and in an attempt to avoid paying the bill and get money for an alternative system accused the IT consultant of delays and providing inappropriate software. Fortunately for the consultant their Professional Indemnity Insurance provided prompt and effective legal support; the client dropped the claim and paid the bill.
In addition to more obvious claims, Professional Indemnity Insurance can cover you for loss of documents, intellectual property, breach of confidentiality, employee dishonesty, copyright infringement, collateral warranties, pollution and other extensions appropriate to your industry.
If you are still unsure if Professional Indemnity Insurance is for you then contact an independent insurance broker who is authorised and regulated by the FSA, if they dont give you good advice you can be reassured that they are insured!
by: Duncan Sutcliffe
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