Businesses always need to be protected in the event that a client or group of clients decides to begin legal proceedings. In this way, professional indemnity insurance is often the most appropriate option to keep in mind. While not all organisations apply, the majority of businesses operating within the United Kingdom will require this form of protection in order to legally conduct their operations. So, it is essential to understand these packages form a basic point of view. Let's take a look at the main principles behind professional indemnity insurance before examining the types and what to keep in mind before signing a contract.
The Basic Principles Behind Professional Indemnity Insurance
The main idea in regards to professional indemnity insurance (much like any other type of insurance plan) is that the owner is provided with an extra layer of financial protection. This fiscal “buffer” can help to cover legal expenses; potentially saving a business from bankruptcy. Some common reasons that can be addressed by professional indemnity insurance include defamation, libel, the loss of sensitive data, a defective product and work-related negligence. Most packages stipulate which of these is covered as well as the amount of financial protection offered.
The Types of Professional Indemnity Insurance
PI insurance is often categorised by the level of protection that a specific plan will provide. However, there are some which are more basic and will not address issues such as defamation. These are generally reserved for companies which require only minimal levels of protection. More comprehensive plans are often required for specific industries such as the technology sector and the medical field. In these cases, instances of malpractice and even personal injury tend to be much higher. It is often wise to speak with an expert to determine which plan is the most suited for one's needs.
Do I Need Professional Indemnity Insurance?
As hinted at previously, the answer to this question involves what your business offers. Any organisation which provides advice, specific services or designs (such as a website developer) should seriously consider obtaining some form of professional indemnity insurance. Otherwise, you could quickly find that you are “in over your head” in terms of court costs and even potential payouts involving lawsuits.
What to Keep in Mind
Always remember that you might not necessarily need the most comprehensive packages on the market. Take a look at a worst-case scenario and what you could potentially expect to lose. Then, base your judgement off of this figure. Also, be sure to speak with a customer service representative at great length in order to address any questions that you may have. Other suggestions include:
- Examine online reviews in order to determine which providers have the most solid reputations.
- Determine whether or not there are any early termination fees.
- Can you upgrade or downgrade a plan at a later date?
- What are your monthly premiums and are these affordable?
Professional indemnity insurance is a very real investment, so please follow these tips in order to obtain the most amenable policies on the market to
