A guide to product liability insurance
What does professional indemnity insurance cover?
Professional indemnity insurance covers the costs of a compensation case brought against you by a client for mistakes made during the course of your work, disputes over your contract and intellectual property.
However careful you are, mistakes and misunderstandings can happen during the course of a job and even small mishaps could lead to a costly claim against you, therefore professional indemnity insurance is key to protecting your business. For a full definition of professional indemnity insurance check out our in-depth guide.
What is not covered by professional indemnity?
While professional indemnity insurance will cover you for many of the unexpected errors that can occur on a job - including professional negligence, unintended breaches of confidentiality or copyright, the loss of documents or data, and will offer reputation management support – unfortunately it won’t cover you for things like bodily injury or property damage (this comes under public liability insurance).
There are also a number of instances where even if you do have the right cover you may still be held liable for claims against you including:
- If the claim includes personal injury such as wrongful eviction, libel, slander, wrongful detention, false arrest etc.
- If the event occurred before your policy started.
- If you wilfully disregard or refuse to comply with statutory regulations.
Luckily, most of these examples are easily avoided in the day to day running of many businesses. So, as long as you stay informed on the latest rules and laws that apply to your industry, and regularly make sure you have the relevant level of cover in place, professional indemnity insurance cover will protect you from unintentional errors at work, contract and IP miscommunications.
Who needs professional indemnity?
If you work in professional services it’s pretty much a guarantee that you will need professional indemnity insurance. However, if you are still unsure whether the risks that professional indemnity insurance covers apply to your work, ask yourself a few quick, simple questions:
**Does my business provide expert advice or consultancy to clients?
Could my work lead to disputes over copyright, quality or vision?
For example, if I design or make creative goods or content e.g. photography
Within my work could I be exposed to claims of professional negligence?
For example, if I offer health advice or training e.g. healthcare professionals
Do I have access to confidential customer information?
For example, contact details, medical history etc. e.g. wellbeing businesses
Am I, a freelancer, contractor, consultant or someone who provides services on a self-employed basis?
Did you answer yes to any of the above questions? Is your work relevant to one of the examples? Then it is highly likely you will need professional indemnity insurance to ensure your business is protected from potential risks.
Is professional indemnity insurance a legal requirement?
Whether you are starting out or want to ensure your business continues to run smoothly it’s important to double check with your relevant industry body if you need professional indemnity insurance in order to make sure you can both operate and are protected when you need it most.
How much does professional indemnity insurance cost?
How much professional indemnity insurance will cost you depends on the cover you choose. In some cases, the cost of professional indemnity insurance may also be affected by the minimum level of cover your industry’s regulatory body requires you to have before you start working.
Professional indemnity insurance with Superscript starts at £7.58 a month.
Taking stock of the risks your business might face in the future will help you to decide the best level of cover to protect you from potential claims against your business. For example, unintentional mistakes made on the job, contract or intellectual property disputes.
In the short-term, cheaper cover might seem like a good financial decision but you’ll want to make sure you have enough cover in the long-term for claims that could arise.
It can help to start by identifying each risk your business faces, and then asking yourself four high-level questions:
- Your business: I am a freelance photographer
- Risk: A client claims the rights to a photograph I took are theirs.
- What insurance is needed to cover this risk? Professional indemnity insurance.
- How likely is this to happen to my business? I’ve experienced this 5 times in the past year.
- How much would this risk cost my business in lost revenue? Last time this happened, it cost my business over £x in customer compensation and legal fees.
- How much would cover for this risk cost? Professional indemnity insurance, including media liability starts at £7.70 a month.
- How much would it cost to make a claim? The excess would be £x, minimum.
Based on this simple assessment, you may decide that the price of professional indemnity insurance is worth it for a risk that could potentially cost your business thousands of pounds.
Professional indemnity insurance may be important to your business, but it might not be the only protection you need to have in place to cover potential risks to you. Find out more about how to get the right combination of covers to protect your work as a professional.