In the past, Professional Indemnity Insurance was mainly the preserve of architects, solicitors, surveyors, accountants and financial advisers.
However, in today's litigious business world, anyone who gives advice or who provides a professional service to clients should consider investing in adequate personal cover.
A PI insurance policy covers you against compensation sought by a client if they claim you have made a mistake or have been negligent in your professional service. It also protects you from what can be a potentially devastating bill - your legal costs. (For more information about what PI covers, see our feature What is Professional Indemnity insurance?).
For some professions, it's a necessity - many professional bodies within the financial and construction industries specifically require their members to hold PI insurance.
But any business that sells expert knowledge or skills, or gives advice in any professional capacity, should consider investing in adequate cover.
Design firms, employment agencies and internet service providers are among the many businesses that now regard Professional Indemnity insurance as an important part of their risk-management strategy.
Examples of where PI insurance has helped
The following are real examples seen by insurers, in which businesses have drawn on their Professional Indemnity insurance.
- Accountant - the insured acted as an adviser on a client's business interests. It was alleged that they failed to advise in good time of their client's entitlement to non-domicile status - a claim was brought against the accountant for failing to maximise their client's tax benefits.
- Consulting engineer - the insured designed bridge structures as part of a new motorway. During construction, defects in the design were discovered - a claim was brought against the consulting engineer for the costs of rectifying the problem, and the costs of delays caused by it.
- Funeral director - a bereaved family brought jewellery for the deceased to wear until the day of the funeral. Unfortunately the coffin was closed and the cremation took place before the items had been removed - the family claimed the cost of the incinerated jewellery.
- IT consultant - the insured had fitted an integrated computer and entertainment system in a luxury yacht. Although the installation was successfully completed, it came to light that the system's configuration created a permanent open internet connection - the running costs of which were sought by the client.
Other benefits of PI insurance
A PI policy gives you direct access to specialist claims staff and advisors who understand your industry, and access to specialist legal teams who can defend a claim in court.
Professional Indemnity cover can also complement your Public Liability insurance, to ensure that you are covered for all possible claims. Many financial service providers now offer one comprehensive policy for both Public Liability and Professional Indemnity combined.
