Professional indemnity insurance – an overview
Working as a freelancer or a consultant can give you the freedom of being your own boss. However, that freedom brings with it personal and professional responsibilities. Professional Indemnity Insurance (PII) may help you better manage any claim from your client that your work resulted in material damage to their business.
If you are in an occupation or profession where you give advice or make recommendations, you may find yourself in the position of having to defend yourself against claims that your negligence, errors or omissions caused your client to suffer financial losses.
PII may typically cover the cost of having to defend yourself against such allegations and will also cover damages awarded against you if the allegations are upheld in court.
This could include losses from:
- breaches of client confidentiality;
- loss of documents or data;
- libel, slander or defamation;
- any infringement, unintentionally, of intellectual property rights;
Not always mandatory
For many professions, professional indemnity insurance may be mandatory. Architects, surveyors, solicitors, accountants etc are just some examples.
Even if PII may be optional in your situation, it may still prove invaluable and not just if there is a dispute with a client.
In a highly competitive job market, having PII cover could give you the edge against another applicant for a position. A prospective client may see PII as a significant factor in your favour.
If you have employees then your PII may typically cover them too for their negligence while carrying out work on your behalf, though do check, as not all professional indemnity insurance policies will offer this cover as standard.
Of course, if you have employees, you may find it valuable to consider what your position would be if they were to sue you for some reason. Some professional indemnity policies may also provide cover for cases such as these.
Public liability insurance
PII may also provide public liability cover.
Public liability insurance may help protect you against claims by third parties of bodily injury or property damage caused by you or your employees a result of your business activities.
Professional indemnity insurance may be optional as far as your particular occupation is concerned. It may, however, prove to be essential to help you operate in today’s litigious business environment with some peace of mind.