Professional Indemnity Insurance (PII) can save firms millions of pounds, and for many it is often misunderstood. Ed Stace, our Head of Direct Business, has put together five key facts that every business needs to know about PII.
1. What is Professional Indemnity Insurance?
Professional Indemnity Insurance provides businesses with the funds to cover damages incurred by their clients when errors are made. The policy covers legal costs and expenses should a client make a claim, as well as compensation for the claimant.
2. Who needs it?
Professional Indemnity Insurance is not a legal requirement, but is classed as a regulatory matter in some professions. Law and Accountancy firms are required to have PII by their regulators. Other professional businesses that work on a contract basis, such as management consultancies, will also find they need the insurance in order to obtain work.
PII can also be a smart choice for less obvious businesses, such as IT consultants and web designers, if their work has an impact on others’ finances.
3. What does Professional Indemnity Insurance cover?
It can cover a range of liabilities; including the topical issue of data breaches and loss of confidential data. It can also cover the unintentional breach of copyright, defamation or libel suits, the loss of goods or money and personal negligence, among other issues.
4. How do you choose an insurance limit?
Choosing your insurance cover largely depends on the circumstances of your business and the types of clients you work for. Often if a business needs PII for a specific client, the client will have recommended a limit themselves. Regulatory bodies will also specify the limit they require from businesses in their sector, £2m is the current minimum for solicitors.
One way to make sure you are covered against any eventuality is to imagine the worst case scenario for your business. From this, you can estimate the legal costs and expenses you could incur if an error is made.
As with any insurance, the worst case scenario is unlikely to happen, but if it does, your business will be prepared.
5. How do you manage the costs of Professional Indemnity Insurance?
Professional Indemnity Insurance can be costly, but going without the cover could be even worse. Legal costs and compensation payments can reach into the millions, and therefore in the long term, Professional Indemnity Insurance is often worth the cost.
White Oak UK can help you spread the cost over a 6 to 24 month period whilst comparing a variety of funding solutions designed to suit your requirements. Our options provide customers with a flexible payment facility, giving you peace of mind that key costs are covered.
To find out more about how White Oak UK could assist you, arrange a call back here or call us on 0330 058 0836 to talk through your options with our team.