Professional Indemnity Insurance. Why Some Professions Need It and Getting the Right Cover.

Professional indemnity insurance is a requirement for some professions and well advised for other business in order to protect you if claims are brought against you by a client due to a problem with work you have done for them.

It is strongly recommended cover if your business offers know-how or skills in a particular field.

Lawyers, accountants and financial advisers are required by law to have professional liability insurance.

Doctors, pharmacists and health care professionals generally won’t practise without it.

Anyone who is in the business of giving professional advice or consultancy services in any capacity whatsoever, especially in working health, management consultancy or IT, and who could be sued for making a genuine mistake, needs it.

As litigation becomes more and more common in our society, it’s becoming the norm for businesses to opt for this type of cover in addition to their public liability insurance.

When we get a new quote request and we ask the client what limit of indemnity they need we often hear these responses:

1) What is the minimum limit?

2) I need a limit of £x under either the terms of a contract or because their professional body requires cover to be in force.

3) What do you suggest?

We never answer question 1 without addressing question 3. The minimum we can usually quote is £100,000, but this will be inadequate for most businesses.

We then discuss with the client their views on the worst possible scenario. What could they face as a single claim?

Many of our Professional Indemnity Insurers quote three or four different limits so that we can see the differences in premium. The differences aren’t huge when you go from £250k, to £500k, to £1m to £2m.

In fact, Professional Indemnity Insurance is not expensive protection for most professions.

If our client asks for a standard limit required by contract or membership of a professional body we will still discuss if this is a sufficient amount.

Professional bodies and Institutions generally require a higher amount as they know the value of adequate protection should the worst happen.

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