You may need Professional Indemnity Insurance
For people who give advice to those that depend on this advice, a duty of care is owed. Generally these are people who charge for their services rather than sell products or perform manual work.
These can be the traditional “white collar” professionals such as Accountants, Architects, Solicitors and Financial Advisors through to Medical Professionals such as Surgeons and General Practitioners. Then there are the myriad of consultants who have expertise in specific areas that are engaged on short or long term contracts to Business or Government departments.
These professionals can be held accountable for the advice that they give. If their advice is incorrect or they have missed providing information and as a result it leads to their client’s suffering a financial loss, it is likely that they will seek compensation.
This means, they will be sued!
Professional Indemnity Insuranceor PI Insurance will protect you against the cost of defending claims where it is alleged that a client has suffered financial loss as a result of your error, omission or negligence. If you provide advice for a fee, we strongly recommend you have this cover.
It is important to note that Professional Indemnity is a “claims made” cover. That means you claim from the policy in force at the time someone brings a claim against you. Not the date within the policy period the advice was provided.
The standard PI Insurance policy will cover you for work carried out after a retroactive date specified. This is often set at the inception date when cover is first taken. So it will not cover any work performed prior to that retroactive date. However it is possible for the policy to be extended to include work you carried out in the past for a small additional premium which suits those who have been in business for a while before taking cover.
So even when care and skill is exercised, there is still the potential for a professional to make a mistake that causes financial loss to a client or for a client to allege that a mistake has been made, even if not. Whilst such disputes are rare, if they do occur they can be costly. Professional Indemnity Insurance will, for a reasonable premium, provide peace of mind against these risks.
In addition, having PI Insurance will bolster the credibility that you are in business on your own account. It will give your clients the reassurance that there are sufficient resources to handle any recourse in the unlikely event of an alleged breach of duty, adding value to any contract.