Professional indemnity insurance is designed to protect businesses that offer services to others. If a client is unhappy with the service they’ve paid for, professional indemnity insurance should protect you against a claim for damages. For example, a client may claim they’ve lost money as a result of the advice you’ve given them.
Alternatively, you could be sued for lost documents or data or even for defamation. The range of companies that are potentially at risk – without professional indemnity insurance – is vast.
This cover is not a legal requirement for all businesses. But it may be required if you’re part of a trade body or subject to industry regulation, and some clients will only work with firms that have it. The right policy can cover expensive claims that could otherwise cost your business thousands in legal fees.
Professional indemnity insurance can be useful for services that include design work, accountancy and financial advice or even marketing and surveys. It's also worth bearing in mind that you could still face a claim even if you provided your services for free.
Professional indemnity insurance works best when the policy is tailored to your business needs, so you have an assurance that you’ll be covered should the worst happen without paying more than you need to.
Once you’re happy that the policy covers your business, you’ll need to check the excess to see how much it’ll cost you if you’re sued. This type of insurance is usually centred around the claim, as it will only cover you for cases brought against you during your policy term.
Professional indemnity insurance is not a legal requirement. But that doesn’t mean you don’t need it. This cover is highly recommended if your business offers a professional service to clients who could sue you should something go wrong.
If you offer advice to clients that might result in them losing money, you could be sued. Similarly, if you mishandle their private and confidential details, resulting in sensitive information being revealed, you could expect a court case.
Likewise, if you damage a client’s property or their reputation through your actions or correspondence, you may face a legal claim. All this can prove very expensive if you don’t have adequate professional indemnity cover in place.
Here are some, but certainly not all, types of businesses that might need to secure this type of insurance:
Financial advisers
Architects
Accountants
Advertising
Journalism
Graphic design
Solicitors
We qualify, quantify and offer insurance using data, analysis and technology, and we serve a wide range of business types — from dog walkers and dieticians, to landlords and locksmiths. Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.
The cost of this insurance will vary, depending on the size of your business and the type of business you run, among other factors. The insurance quote will also take into account your annual turnover, your claims history and the limit of indemnity you need. You’ll also need to decide how much excess you are willing to pay as this will contribute to the final cost.
As with most policies, price shouldn’t be your main priority. Cheap insurance could end up costing you more if it doesn’t provide the cover you need. To get the best deal, look for insurers that allow you to tailor your policy to your needs so you're not left over - or under-insured.
Business | Monthly premiums from* | Monthly premiums to* |
---|---|---|
Software and IT services | £9.08 | £65.42 |
Graphic designers | £9.08 | £17.51 |
Photographers and videographers | £7.71 | £20.34 |
Marketing, advertising and communications | £9.08 | £46.67 |
Management consultants | £9.08 | £23.11 |
Recruitment consultants | £11.25 | £71.25 |
*Superscript: 10% of Superscript customers paid this much, or less, between October and December 2023.
**Superscript: 90% of Superscript customers paid this much between October and December 2023.
These prices should only be used as a guide. When you get a quote, it will be tailored to your unique circumstances and risk profile – so you may be quoted a price that’s a bit higher or lower.
And as with most covers, price shouldn’t be your only priority. Cheaper insurance could end up costing you more if it doesn’t provide the cover you need. To get the best deal, look for insurers that allow you to tailor your policy to your needs so you're not left over- or under-insured.
For some industries, it’s a requirement to have professional indemnity insurance.
Even where it’s not a legal requirement, the decision to take out professional indemnity cover could make a lot of sense. If you decide not to have it and someone makes a claim against you then you could face hefty legal fees, and your business would become exposed. You may also find some clients expect you to have cover in place, and may ask to see your insurance certificate.
Professional indemnity insurance covers you against claims that you provided negligent advice or services that lead to financial loss or damage for your client. Public liability insurance covers you if members of the public are injured or their property is damaged following contact with your business. This insurance covers you whether you’re carrying out work for them or not.
You’re typically only covered for claims that arise after you get cover. If you’ve been running your business without professional indemnity insurance, you may want to ask your insurer whether it offers retroactive cover.
The retroactive date is the day stated in your policy from which you’ve held uninterrupted PI, even if you’ve switched insurer during this time. Any work you carried out before this date won’t be covered.
It’s sometimes possible to add a retroactive date to a policy that’s earlier than the cover start date. This means some or all work you completed from this date would be covered, even if it was before you took the policy out.
Many insurers will send a certificate of insurance by email and by post. You can then forward your electronic copy to potential clients as proof of insurance.
Although professional indemnity insurance isn’t a legal requirement, it’s well worth considering if through your work you offer advice or services. If negligent advice results in your clients suffering financial loss, it could save you from the cost of defending a legal claim. As a self-employed business owner, you may also find some client companies will only work with you if you have this cover.
You’ll typically need to pay an excess to claim on a professional indemnity policy. The amount you’ll need to pay can vary depending on your premiums and the nature of your claim.
Yes, as it’s an ‘allowable expense’ you can deduct it from your profit before you pay tax on it.
Yes, you can – you might want to take it out for the duration of a specific contract, for example. However, this is risky as you won’t be covered if a claim is made against you after the contract ends.
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