This blog post will cover misconceptions regarding Professional Indemnity (PI) Insurance. We hope you find the explanations and additional information you need to fully understand all things Professional Indemnity Insurance.

 

  1. 1. If you don’t charge for your advice, you can’t be claimed against – FALSE!

Many people assume that Professional Indemnity applies only to professionals who charge for their services. You may not sue if you are doing a preliminary design for a quote or writing an article ‘on spec’. Any professional who renders a service to clients has a duty to them. They have to give their clients the best advice from their expertise. You could be sued for negligence if your advice results in a loss to clients, even if you gave it freely.

 

  1. 2. My client could never claim for more than the value of my fee – FALSE!

If a client loses money due to your services, they may not only be entitled to the fee you charged, but also for any other or related losses. The losses you cause by your professional services may be more than the contract’s value. It is worth asking yourself “What if…”

 

  1. 3. If I have a disclaimer which limits liability, I will only be liable for the amount I state – FALSE!

It’s not as simple as it seems. Some liabilities cannot be excluded or limited. Wordings can be challenged in court. Sometimes, ‘onerous and unusual’ terms may be ignored. PI can provide additional protection. PI Insurance includes a legal advice service that can help you understand how a disclaimer might or may not protect.

 

  1. 4. Indemnity coverage is not necessary, because my work has been reviewed and signed off – FALSE!

Your business may be sued for negligence or breaching a duty to care, even if your work has been approved and signed off by qualified employees. The business that employs employees is responsible for their work. However, a subcontracting limited or sole trader who produces reports, designs, or any other advice for clients is still protected. They can be sued even after the initial work is completed and signed off.

 

  1. 5. While my contract is in effect, I do not need a policy – FALSE!

Professional Indemnity, unlike most policies, is also known as “Claims made”. This means you can be sued even if you’ve provided services for a long time. You will not be covered if your policy is cancelled after a claim has been made. After you have provided your services, professional indemnity must be maintained. This is often a condition of certain contracts.

 

  1. 6. It won’t hold up in court, so there is no need to have a Professional Indemnity insurance – FALSE!

Even if it seems obvious the loss was not your fault, legal fees associated with defending a claim can quickly add up and bring down a company. A Professional Indemnity policy has the advantage of responding immediately after your client makes a claim. This provides guidance from experts and specialist solicitors, and can save you significant money.

 

  1. 7. Professional Insurance only covers financial loss – FALSE! 

Modern Professional Indemnity policies include various additional features. These extra features include protection against claims that you have violated another person’s intellectual property, misrepresented the client, damaged their reputation or otherwise acted dishonestly. Different industries are exposed to different risks, so it is worth receiving a quote to see the various cases that a policy would cover you for.

 

Contact us to learn more about Professional Indemnity Insurance or to ask any further questions you may have. Our Partners can help you understand how PI works and provide a quote for PI Insurance tailored to your business’ specific needs.