The importance of Professional Indemnity (PI) insurance
If you provide advice, design or offer a service in a professional capacity, you will be seen as an expert by your clients. They will have high expectations from you, and in today’s increasingly litigious society, whether you are at fault or not, they may take issue with the advice you have provided or the work you have carried out and seek compensation.
Even if you are not at fault and can successfully defend your claim, you could be left with significant legal costs, which could be crippling to you and your business.
What can I do?
Whilst there is no way to predict if someone may claim against you, by ensuring you have Professional Indemnity insurance (PI) in place, you can provide yourself with a certain level of protection. PI provides cover for the legal costs and expenses in defending a claim, as well as compensation payable to your client if you are found to be responsible for providing inadequate advice, services or designs that cause your client to lose money.
In the event that a mistake does happen PI can help you to manage the situation quickly and efficiently. The fallout from a claim being made against you has the ability to be damaging to your business. In most cases the sooner you are able to respond to a claim the better the outcome both financially and for your reputation.
What should I consider when buying PI insurance?
When looking to buy PI it is really important to make sure the cover is at the right level. By working with a broker who specialises in the field, you can discuss with them the breadth and amount of cover you require. These will be determined by a number of factors, including any contractual obligations you may have, including the length of time you are required to be covered post-contract. The value of your contracts and of course cost of the policy. Having taken the time to choose a reputable insurer and broker, make sure you take the time to read and understand your policy wording, endorsements and exclusions.
What else can I do?
Alongside taking out the correct level of PI, take a look at your risk management, are you doing everything to protect yourself?. Obviously ensuring you have a good knowledge of your products is a great place to start – but undertaking due diligence on products and services is also important.
Check that your marketing literature is clear, accurate and not misleading and when dealing with clients undertake a level of fact-finding to ensure you are providing them with the right product.
If you find yourself in a situation where you do have a claim made against you, then it is vital you are able to provide evidence to support the advice you have given. Therefore detailing your procedures and keeping copies of documents and notes on file is not only good practice, but could protect you from a successful claim being made against you in the future.