Professional liability insurance – also known as professional indemnity cover – may not be compulsory for your sector. But it could be an investment in risk management worth considering.

This cover offers protection against legal costs for businesses that give advice or services for a fee. It’s important to know that general liability cover would not protect your business from claims because of negligence, misrepresentation or, for malpractice. That’s where professional liability insurance comes in to bridge the gap.

What happens when you give the wrong advice?

Mistakes, whether honest or careless, could lead to a business giving incorrect advice to its clients. Minor errors might be easily fixed, but others could have serious consequences for the businesses of the client and the professional services firm.

When could a professional negligence claim arise?

Scenarios that could trigger a professional negligence claim against your business regarding your professional services include, but are not limited to mistakes, errors, omissions, or sub-standard work that led to harm, unqualified advice given by your employees, or inaccurate course of actions or evaluations.

Assessments before deciding on a policy

Conduct a risk assessment of your business to understand your professional liabilities. Factor in your business size, complexity, and financial resources you can call on if a client claims against you. Your industry may have compulsory minimum requirements for policy wording and standards of cover. To work out your potential liability, estimate the worst loss scenario, amount of claims that could be lodged by per client, per policy period.

What PI should cover?

Next, consider how well a policy matches your needs by looking at the suitability of the cover provider; minimum sum insured and excess; does it cover past work, and everyone affiliated with your practice; protection against defamation, document loss and breaches of confidentiality, etc. Also note that most professional indemnity policies don’t cover property damage and bodily injury claims.

How to be confident you’re covered

Unfortunately, you could offer exemplary service, but you have no control over an unhappy client claiming against you, even if there’s no merit to their issue. Even if your business does not contest a claim in court, the public could see that as admitting guilt. Expect your business reputation to suffer.

If you would like to know more about Professional liability insurance, please CLICK HERE, or contact us for more information.