Professional Indemnity

This section provides answers to the following questions:-

What does Professional Indemnity insurance do?
Why compare Professional Indemnity insurance with Coverzones?
Why is Professional Indemnity Insurance Needed?
What Cover Does a Professional Indemnity Policy Provide?
What are 'Aggregate' and 'Any One Claim' policies?
What does 'Costs Included' or 'Costs Excluded' mean?
What is 'Retroactive Cover'?
How much Professional Indemnity Cover will my Business Need?
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What does Professional Indemnity insurance do?

Professional Indemnity insurance protects professional businesses against their legal liability towards third parties for injury, loss, or damage arising from their professional negligence or that of their employees.

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Why compare Professional Indemnity insurance with Coverzones?

Coverzones can save you time and money on your professional indemnity insurance. We compare the professional indemnity insurance policies of the major commercial insurance companies to find you the right cover at the right price.

Coverzones makes it quick and easy to get the best professional indemnity quote and then buy it and manage it through our secure website. You can save and change your Professional Indemnity quote through your own, free MyCoverzones account.

You can get Professional Indemnity Insurance quotes now.

Why is Professional Indemnity Insurance Needed?

Professional Indemnity cover protects your small business from financially crippling and often reputation-damaging claims by dissatisfied clients. Even the most respectable companies can find themselves in dispute with a client over a mistake. Below are some of the danger areas your small business could be exposed to:

• Negligence - a breach of duty of care
• Intellectual property - where you unintentionally infringe on someone's copyrights, trademarks, broadcasting rights, or you may inadvertently pass your business off
• Loss of documents or data - damaged, lost or stolen data and documents belonging to your clients
• Dishonesty - liability arising from the theft of your clients' money

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What Cover Does a Professional Indemnity Policy Provide?

Professional Indemnity insurance works in a number of ways.

It will cover you if you make a mistake in the professional services you have provided should this lead to a dispute with a client. If the dispute becomes complicated, your insurer can defend your claim - right through to the High Court, if necessary. Even if you lose, the policy will still cover you for any damages you then become liable for, subject to the level of cover your business is insured for.

Professional Indemnity insurance will also cover the cost of fixing any mistake on your part, which will potentially help you avoid a larger claim. You are also protected by your Professional Indemnity insurance policy if you lose or damage any clients' documents or if one of your employees is involved in the theft of a client's money.

It is of critical importance that you maintain continuous Professional Indemnity insurance if this is a coverage you need, as the indemnity is on a ‘claims made' basis and any gaps in time could result in an exposure.

What are 'Aggregate' and 'Any One Claim' policies?

An ‘Aggregate' policy will only cover the cost of claims up to the cover limit you have selected. Each claim you have in the year effectively reduces the amount of cover you have left in your policy for any subsequent claims. So, if you have £1m of cover and a claim for £400,000, you would have £600,000 of cover left in the policy year. 

The alternative to an 'Aggregate' policy is an 'Any One Claim' policy - a more expensive option that provides more cover.

An ‘Any One Claim' policy applies the cover limit you select to every claim that happens during the policy year.  So, if you select £1m of cover and have three claims in the year for £900,000 each, the costs of all three totalling £2.7m would be covered. 

What does 'Costs Included' or 'Costs Excluded' mean?

With any claim there are various legal costs, such as the costs of legal investigation and defence, loss adjusters, experts, court costs and claims settlement.  These costs are normally covered by Professional Indemnity policies, but the way these costs are covered by the policy may vary.

Some PI policies include the payment of these costs within the cover limit of the policy (known as the 'limit of indemnity'), in which case there is effectively less cover for paying damages ('Costs Included').  Other policies cover these costs under a separate part of the policy, ensuring the maximum amount is available for paying damages ('Costs Excluded').

What is 'Retroactive Cover'?

Retroactive cover extends the protection of your PI policy to cover the work you did prior to the time you bought your policy.

How much Professional Indemnity Cover will my Business Need?

The amount of cover your small business needs depends entirely on the type of services it provides, so there is no general rule of thumb for how much cover your business will need. You know your business best and the sort of exposure it faces.

When deciding on the amount of Professional Indemnity cover to have you should consider the value of the work you are doing for your clients and the potential financial impact on them should it go wrong. Other than that, it's advisable to buy as much cover as you can afford.

Sometimes your client will set a minimum limit of the indemnity they require before you can work with them. This can depend on the specific nature of the services you've been contracted to provide, or they could have a set limit for all their service providers. Many UK government departments, for example, will require their contractors and consultants to have at least £5 million of cover.

It is also worth considering taking retroactive cover for work that you've already completed before the policy commences. This means that your Professional Indemnity insurance policy will cover you for any claims arising out of work you completed in the past. You will be given the option of taking out retroactive cover when you get your professional indemnity insurance quote.

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The Coverzones service has been specifically developed to cater for the business insurance needs of the small company. With over 700 trades and professions covered, you can be sure that using our online service you will be able to find the cover best suited for your business.

Coverzones compares the market on your behalf to provide you with up to 6 of the best small business insurance quotes from the UK's leading commercial insurance companies. Register for a complimentary MyCoverzones account and you will be free to buy, amend, renew or cancel your policies in your own time, at your own pace.