Professional Indemnity Insurance (PII) is necessary to provide businesses with the relevant cover for damage costs, which may be incurred if a claim is made by their clients in the event of an error. The insurance will cover the legal costs and incurred expenses should a client make a claim, as well as, potential compensation for the claimant.
Who needs Professional Indemnity Insurance?
Many businesses will need to have PII as part of their professional bodies’ requirements. For example, law firms, in England and Wales, are required to have PII by the Solicitors Regulation Authority, as well as, the General Dental Council who require dental professionals to have indemnity insurance. Other businesses that work on a contract basis, such as management consultancies and recruitment agencies, will also find they need the insurance in order to work.
What does Professional Indemnity Insurance cover?
It can cover a wide range of liabilities, such as; data breaches and loss of confidential data, intellectual property and professional negligence. It can also cover the loss of goods or money, among other issues.
How do you choose an insurance limit?
Choosing your insurance cover depends on your business and the types of clients you work with. 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.
How can I manage the costs?
Professional Indemnity Insurance can often be a costly expense for your business, but not having 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.
Whether you are keen to align your renewal date with other business processes, end of financial year and insurance renewal dates, there is the option for you to change your PII renewal date. However, this depends on your business circumstances and the requirements from your insurer. As of 2013, Solicitors can now change their renewal date.
Did you know? Our short-term PII loan can help you to spread the cost of your PII bill over a 10 to 24 month term*.
The key benefits of the loan include:
- Decisions within as little as 24 hours
- Payments can be made directly to either your insurance company or broker
- Combine both your PII and Practising Certificates into one loan
What are the consequences of not paying Professional Indemnity Insurance?
Without any insurance, you may not be able to trade, as mentioned above the majority of professional bodies’ require PII to work.
*Finance term cannot exceed the insurance term.