Who Needs Professional Indemnity Insurance?

by | Aug 12, 2022 | Professional Indemnity

What is Professional Indemnity insurance? What does it cover? And who needs professional indemnity insurance?

Every business is unique and has different insurance needs, but anyone who provides advice or services in a professional capacity should consider taking out Professional Indemnity insurance (also called PI insurance or PII).

Read on to find out everything you need to know about Professional Indemnity insurance and how to ensure your business is protected against claims of negligence.


What is Professional Indemnity Insurance?

In a nutshell, PI insurance is a commercial policy designed to protect business owners, freelancers and self-employed people against claims of alleged negligence.

It can help protect your business if someone makes a claim against you for financial losses due to an error or omission in the professional advice, design, certification or service that you provided.


Is it compulsory?

Professional indemnity insurance is not a legal requirement. However, it is mandatory for some professions that operate under a regulatory body, such as solicitors, financial advisors, chartered accountants, surveyors and architects.

In addition, many clients will not work with businesses that do not have PI cover in place.


What exactly does it cover?

The policies available mainly cover professional negligence, errors or omissions, civil liabilities, and breaches of professional duty of care.

Professional Indemnity insurance typically covers the costs of your legal fees and expenses, as well as any damages or costs that may be awarded.


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Here are some examples of when you might need PI insurance:


  • Professional negligence

Example: A client follows your advice and loses money as a result, or you make a mistake in a piece of work you complete for them.


  • Unintentional breach of confidentiality

Example: You share some confidential information about a client without permission.


  • Unintentional breach of copyright/trademark infringement

Example: While designing a website, you use a photo without permission and your client gets in trouble for it.


  • Defamation and libel

Example: You make a false comment about a client or competitor that damages their reputation.


  • Loss of documents, data, money or goods for which you are responsible

Example: You accidentally misplace or damage important documents relating to your client’s business.


Who needs Professional Indemnity insurance?

In a nutshell, anyone that provides professional services as part of their business activities should consider taking out Professional Indemnity insurance.

Although it is not a legal requirement for most professions, everyone makes mistakes from time to time — and even a tiny error can have disastrous consequences for your business.

Myth buster: You may be liable for claims of negligence even if you are providing it free of charge. Professional Indemnity insurance not only covers you for claims from paying clients and customers but also from recipients of free advice or services.


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Which businesses should get Professional Indemnity insurance?

The list of businesses that require Professional Indemnity coverage is growing all the time, and some professions are more at risk of PI claims than others.

These include:

  • Accountants
  • Financial advisors
  • Business consultants
  • Architects
  • Building contractors
  • IT consultants
  • Technology companies
  • Architects
  • Engineers

Basically, if you provide advice or services in a professional capacity, you should consider taking out Professional Indemnity insurance.


What happens if you don’t have Professional Indemnity insurance?

Any person or company that is offering advice or expertise is open to expensive legal costs and compensation claims if they are deemed negligent.

If a client makes a claim against you for breaching your professional or contractual duties and you do not have PI insurance in place, then you could be liable for thousands of euros worth of legal fees and/or compensation payments.


How to find the right broker

A good PI broker will be able to help you identify potential areas of risk in your business that you may not have considered.

Because there is such a wide variety of different products and types of cover available, it is essential to go to a broker who has a high level of expertise in this area.


Your Professional Indemnity insurance broker

At ERM Financial Services, we have the experience, knowledge and expertise to provide your business with the Professional Indemnity cover you need.

Protect yourself with our Professional Indemnity insurance and ensure your organisation, and all the hard work you’ve poured into building it up isn’t exposed to potentially catastrophic risk.

Also, make sure to check out our blog and resources page to keep up to date with the latest news and trends from the insurance world.