What is Professional Indemnity Insurance?
Professional indemnity insurance (also referred to as PI insurance) is designed to protect you in the event that you make a mistake that causes financial loss for a client, who then takes legal action against your business. For example, if an error or omission in coding work causes your client’s system to go down, they could sue you. With a professional indemnity policy in place, the defence costs and resulting damages would be covered up to your level of cover, should you be found liable. PI insurance is one of the most commonly bought contractor insurances.
Why do Contractors Need PI Insurance?
Because mistakes can happen and should your business be held liable for these, it could be financially devastating. Even if you haven’t done anything wrong but a client is of the view that you have and opens up legal proceedings, the costs of expert advice and defence can easily mount up. Without professional indemnity insurance in place, you would have to pay this yourself. Additionally, PI insurance may also be stipulated in contractual arrangements by clients, meaning if you fail to hold this insurance could result in a breach of contract.
What Does Professional Indemnity Insurance Cover?
This business insurance covers a range of problems that you might face, including:
- Professional negligence – such as mistakes when providing your service to a client or poor advice
- Unintentional breach of confidentiality – like sharing sensitive client information
- Unintentional breach of copyright – using images, logos or information without having been granted permission by the owner
- Defamation and libel – publicising incorrect information or making false statements about a competitor, causing reputational damage
About Markel
Markel are an award-winning contractor insurance provider with over 200,000 customers in the UK and are rated 4.8 out of 5 from 2,000+ customer reviews.
Get a quote for professional indemnity insurance today, including access to a 24-hour access to a legal advice helpline and legal document hub.