Professional indemnity insurance for small businesses


Professional indemnity insurance is something that any small business owner should understand. As the nature of your business often involves your interaction with the public and employees on a day to day basis, it is essential to ensure you and your business is protected.  Below are points highlighted to demonstrates the importance of professional indemnity insurance and how it benefits for you and your business to have it. 


Who Needs Professional Indemnity Insurance?

Professional indemnity insurance is recommended to any person who provides advice or services to their customers. If you run your own business, sole trader or working as a freelancer, there is an increased risk that you alone may be responsible for any legal implications resulting from your work. Which is quite standard for any form of contracts you sign when providing these professional services to contain a section that states you are legally liable for the work you are undertaking.

This makes having professional indemnity insurance crucial for any business owners or freelancers who provide services that could potentially result in some form of legal action or a claim being made. When a claim is made against you, it not only cost time but it is also expensive to defend against a claim of professional misconduct, malpractice or breach of duty. You could be held responsible not only for your own actions but also for those of your partners, employees or volunteers. Your reputation can be impeded and result in severe financial strain. Professional indemnity insurance can protect against these professional risks without worrying about the ‘what ifs’.


What is Professional Indemnity Insurance?

Professional indemnity insurance is designed to cover you financially in the event a claim is filed against you because of any mistakes, accidents, or omissions could occur as a result of your professional services. It protects your business against legal costs and claims by third parties for damages that arise.

The types of claims for damages against you include, but are not limited to, the following:

  • Personal injury
  • Property damage
  • Failure to meet the terms of a contract (e.g. failing to meet a deadline or achieve the specified result of a contract)
  • Financial loss
  • Dispensation of incorrect advice/information
  • Defamation

While policies vary among insurers, some typical elements of professional indemnity insurance cover include the following:

  • The costs of investigating, legally defending or settling claims
  • Costs associated with personal injury or property damage claims

Civil liabilities — resulting from things like defamation, theft of intellectual property, copyright infringement, breach of contract duties, etc.

What doesn’t it cover?

What a professional indemnity insurance policy doesn’t cover will vary among insurers, but in general, the following are not typically covered:

  • Insolvency
  • Terrorism
  • Intentional damage
  • Claims relating to circumstances that were known prior to the inception of an insurance policy

How do I go about getting it?

You have a few options where professional indemnity insurance is concerned. You can purchase it as an individual policy or as part of a business pack insurance policy. If you belong to a professional industry association, some will occasionally offer professional indemnity insurance specific to your industry, this can be helpful as claims that arise can vary from industry to industry.

As with any form of insurance, it’s best to seek professional advice, so contact the team at it’s insured to get the right cover for your business.


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