The need for professional indemnity insurance

January 30, 2010 · Filed Under Professional indemnity insurance 

Professional indemnity insurance (or PII) may be important in helping keep your business going and perhaps in some cases, even helping you avoid financial ruin.

In the case of some professions it may be mandatory and even if not, it may be highly advisable.

The problem

In much of social life, if we make a mistake then usually a simple apology and perhaps some form of minor restitution will usually suffice to smooth things over.

This though, is becoming less and less common as an approach in the professional world. In today’s business society there is a growing inclination towards litigation and blame attribution when things go wrong. In many situations you may find that putting your hands in the air and saying “sorry – we messed up” is no longer sufficient.

Some examples

As a professional, you may find that you can be financially and legally exposed by any number of your normal daily activities including:

  • the provision of advice and guidance to support decision making, should that input subsequently be proven to be incorrect – you may be vulnerable to ‘professional negligence’ claims;
  • the provision of data in the same circumstances that subsequently is shown to be materially inaccurate – once again this could be interpreted as a failure of due professional care;
  • if you have designed or recommended a solution that does not work or does not function as specified;
  • you have published or said something critical relating to a supplier, individual or perhaps even a product – if inaccurate you may find yourself facing legal action for libel, slander or defamation;
  • you or your staff have accidentally released confidential client information or records to unauthorised parties;
  • you or a member of your staff is perceived to have been working with a client and making recommendations or providing services whilst under a conflict of interest;
  • a member of the public has been accidentally injured by you, your staff or your property – this may result in public liability claims.

This is only a sample of the things that may potentially result in you facing legal action and very high damages costs.

The costs

It is impossible to generalise because each situation will be different. Even so, without an appropriate professional indemnity insurance policy, you could be facing awards running into 6 or even 7 figures.

The insurance options

Professional indemnity insurance is not something to be taken lightly. Being under-insured is a real risk but of course you probably won’t want to be paying for insurance cover that you don’t need.

It may be advisable to contact a specialist provider of professional indemnity insurance. They can be found on the Internet and will typically be only too pleased to offer free information and quotations.


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