Who needs professional indemnity insurance? Anyone which provides a service, design, advice, or specification

Who needs professional indemnity insurance?

Written by Simon Taylor

 

If you provide a service, advice, consultancy, design, plans or specifications to a client, or if you handle confidential or sensitive information, you'll need to consider professional indemnity insurance

If you don't operate in a sector where the insurance is mandatory or have not been required to purchase under contract, businesses will question whether they need professional indemnity insurance. Especially, if they have had no experience with clients seeking to claim damages against them. 

Underinsurance is not uncommon and then businesses will unfortunately face having to pay legal fees and damages to put their customers back into the same financial position as they were before. 

Read more about: Professional Indemnity Insurance


How do we know if we need professional indemnity insurance?

A professional service is intangible, offered by persons selling their skills and specialist knowledge based on their experience or qualifications. Such people are relied upon as being experts in their fields and hold a greater level of knowledge and specialism in their subject matter than the average person.

Traditional professions include: accountants, architects, engineers, financial services, solicitors, and surveyors. However, these days it's more common for a wide range of businesses to purchase the cover. Advertising, advisory, consultancy, contractors, designers, hosting, inspection, intermediary services, technology services, marketing, media, mediation, project management, recruitmentsoftware development, specification, testing, training, translation, and valuations.


Is professional indemnity insurance necessary?

The cover is not usually a legal requirement for most professions in the UK. However, there may be specific reasons why a policy is arranged - below we take a closer look at why businesses may need professional indemnity insurance:

1.) Firstly, some regulators and/or professional bodies require companies or individuals to hold minimum professional indemnity insurance cover to operate or continue their professional membership.

2.) Secondly, businesses that offer advice, provide a professional service or handle client data or intellectual property would benefit from having cover to protect against third-party claimants seeking financial compensation.

3.) Thirdly, other companies may require cover to win new contracts and prove to potential customers they have the financial means to offer compensation should you breach the terms of your contract.

 

Why can't you rely on limitations of liability under contract?

It's common practice for contracting parties to limit their liability under contract. However, its worth considering that it doesn't matter what you agree under contract, a court of law can award damages over and above what you have agreed.


Professional Guides:

 

The below is a list of professionals who should consider the need to arrange professional indemnity insurance - please note the list is NOT exhustive and you should talk to an expert about your specific requirements:

 

Professionals A - F

Access Consultant, Accident Investigators, Administrators, Agricultural Consultants, Answering Services, Arbitrators, Arboriculturist, Archaeologists, Auctioneers, Babysitting Agency, Beauty Salon, Business Advisors, Careers Advisory Service, Catering Professionals, Change Management, Chartered Secretary, Conference Organiser, Counselling Service Professionals, Driving Instructor, Education Advisory Service, Estate Agents, Executive Coaching, Exhibit Designer, Export Consultants, Food Industry Professionals, Forensic Advisor, Forestry Consultants, Fuel Efficiency Professionals, Funeral Directors.

Professionals G - Z

Health and Safety Consultants, HR Consultants, Inspection Services, Interior Designer, Landscape Gardener, Lighting Design, Loss Adjuster, Market Research, Meeting Planner, Non Destructive Testing, Professional Office Services, Photographer, Private Investigator, Professional Mediator, Public Relations Consultant, Quality Assurance Professional, Recruitment Consultants, Research Services, Secretarial Service, Security Guards, Speech Therapist, Statistician, Tourist Association, Town Planner, Trade Association, Traffic Professional, Transport Advisor, Training Consultants, Translator, Wedding Planner, Wildlife Advisor. 

 

 



Originally posted by Simon Taylor, Get Indemnity™

This guide is for information purposes and based on sources we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.