Are you fully protected by your Professional Indemnity cover?

Are you fully protected by your Professional Indemnity cover?

Did you know that you can be sued for professional negligence in the provision of advice and services, even if no fee was charged? Sally Swann, explains how to protect your business against professional negligence claims.

Professional negligence claims are common and can be down to simple administrative errors, unintentional breach of intellectual property rights, breach of confidentiality and loss of documents or data. You can be sued and found negligent even if no fee was charged for the advice and services.


Professional Indemnity cover

Professional indemnity (PI) insurance protects you against claims made by a third party alleging breach of professional duty arising from the provision of professional advice and services. 

PI insurance not only covers damages arising from a breach of professional duty, but also legal fees and costs incurred in the defence of a claim.


How much cover is sufficient?

This depends on a number of factors, including:

  • The type of work you do
  • The risk that someone will take legal action against you
  • The potential size of a claim
  • Any requirements stipulated by a contract or regulatory body. 


Consider the worst-case scenario from a financial perspective – what could the monetary damage be to one of your clients as a result of your negligence; and what is the likelihood of this happening?

When you take out PI cover for the first time you may only be covered for your professional services performed after the inception date of that first policy. But you may be able to buy retroactive cover, to give protection for future claims that arise from professional services performed before the inception of your first policy. 


Seek advice

Getting PI insurance wrong, either through failing to disclose material information or by not having sufficient cover, can be hugely expensive so it’s important to get the right advice before taking out cover.