Who can buy professional indemnity insurance?

Who is professional indemnity insurance for?

It is for any business that gives advice to clients, provides professional services, designs, specification advice, or handles client data or intellectual property.

In addition to professionals, architects, consultants and accountants, professional indemnity is for designers and – in some cases – builders, tradespeople, and those in the construction trade.

What is it for?

It protects you and your business if you are sued by a client for financial loss resulting from a professional service (like those listed above) your business provided.

Must I have it?

Certain businesses are legally obliged to have it, such as accountants and lawyers. For others it is not required, but it may still be important.

For example, if you are successfully sued by a client for giving poor advice that ended up costing them a lot of money, the costs of court proceedings and the damages awarded could add up to thousands or hundreds of thousands of pounds.

Without insurance, your business would have to pay these costs. For many businesses, this amount could be financially crippling, or even result in bankruptcy.

It should also be noted that some clients will only do business with you if you have appropriate professional indemnity cover. Many trade associations will not allow you to become a member without it.

All of this means not being insured can have the potential to harm your long-term business prospects.

What does professional indemnity insurance cover?

This may depend on the specific terms of your policy. Most policies will cover things like:

  • negligence (i.e. if you make a mistake or give incorrect advice)
  • loss or damage of documents in your care
  • libel or defamation (i.e. saying or publishing something publicly that harms the reputation of your client)
  • breach of copyright or professional confidence.

It should also cover you if one of your employees is responsible for any of the above happening.

Who can buy professional indemnity insurance?

You do not have to be a business owner, a large organisation, or limited company to obtain a policy. You can buy one if you are a small business, or operate as a partnership.

It also doesn’t matter if the size of projects you take on are small or your revenue is not large. All these points will be considered when calculating your premium.