For businesses operating within certain spheres, professional indemnity cover is not just a necessity – it’s a legal requirement. Solicitors, accountants, architects, mortgage intermediaries, financial advisers and insurance brokers are all required by law to have professional indemnity insurance (PII). In addition, many groups which offer services, skills and advice such as public relations firms, designers and advertising agencies, also choose to take out professional indemnity cover.
If you are required by law because of your profession to hold PII you will have to meet minimum levels of cover, however if your business falls into a sector where the insurance may be optional, you are best placed to judge whether your company would benefit from the protection. In terms of the level of cover you take out, you should as a minimum guide take cover to the value of work you are providing to the client and in some cases you may find a client stipulates that you should take out a set value of cover in order to work with them.
With regards to what a policy will cover - professional liability insurance protects businesses against claims of negligence occurring during the course of offering services, duties or advice. PPI also covers the cost of any legal defence against these claims. Professional liability insurance generally covers firms against actual or alleged errors occurring as negligence, a breach of duty and civil liability. Deliberate errors will not be covered. Negligence may include making an error or omission which deviates from the original brief and civil liability cover protects against breach of contract, libel or slander. Civil liability cover can also protect against workplace incidents though such as the accidental infection of IT systems with viruses.
The responsibility for ensuring a business has enough PPI cover falls on the company themselves, so always be aware of any legislation which places stipulations on the level you need. Take time to plan the cover you need and find a policy that can be tailored to your needs. Finally, remember to review your level of cover regularly, so that you are prepared for the worst should it happen.