Professional indemnity (PI) insurance is an insurance product that will protect you in the event that your business is sued by a client. This could happen if a client is unhappy with the work you’ve produced or professional advice you’ve provided. Even if you haven’t made a mistake, you may still have to fight a claim and this form of insurance will help to settle disputes and cover the cost of your legal defence.

If you’re a professional business that provides advice and services to your clients, PI cover should be seen as an essential consideration for your business insurance package. It’s important that you feel confident in the quality of your work, but even with the best intentions, accidental errors and disputes over quality can happen.

Professional indemnity insurance covers you in case you need to pay to correct a mistake, or to cover legal costs, if you make an error in your work. While this falls under cover for ‘negligence’, you should also consider a policy that offers cover for intellectual property, dishonesty, defamation and loss of documents too.

You would draw upon your professional indemnity insurance if, for example, an employee sends a gossipy email about a difficult client to a supplier and copies in the client by accident. You may also need it if your IT system fails, causing you to lose some of your client data or documents, and they’re difficult and costly to retrieve it. A case for infringement of intellectual property rights could arise when incorporating copyrighted stock images without permission without asking for permission first.

PI insurance can cover you for all these eventualities from the start of your policy, but if you’re worried that work you’ve already done may need to be protected against a claim you can also get a retroactive date for your policy.

If your business provides a professional services or advice, handles sensitive data, or has repsonsibility for intellectual property on behalf of other businesses or individuals, it is worth considering professional indemnity insurance to protect your business. This will cover compensation and legal costs should a client take you to court for mistakes or negligence in your work.

For some professional bodies and regulators, it is a legal requirement for members to hold professional indemnity insurance because of the risks associated with the territory, naturally the requirements vary between industries. Examples of professions that may be obliged to get professional indemnity insurance as a term of their regulatory bodies are accountants, solicitors, surveyors, healthcare professionals and engineers.

The amount of PI cover your business could benefit from will depend on the nature of your work and the size of your clients. To gauge how much PI cover your business needs, contact your clients and ask how much they would expect from you. A minimum amount of cover may also be specified by a governing body that you belong to.

Otherwise, consider how much it may cost to rectify a problem with a client in a worst-case scenario, including legal fees and losses incurred. This will work as a guideline for how much cover you could benefit from.

The cost of professional indemnity insurance depends on factors such as the amount of cover your business needs and the nature of your work. Professional indemnity quotes start from £100 a year (based on policies from at least 10% of our customers), with some higher policies covering up to £10,000,000. Cover can be tailored to a wide range of professions to protect from the most common risks your business could face.