If you’re in the business of selling your knowledge or skills then it’s important you think about taking out Professional Indemnity insurance. You could face some rather scary claims if your work turns out to be negligent, or if you’ve made mistakes. Compensation worth hundreds of thousands of pounds can be awarded for something like your client's e-commerce site going down, or getting their contact details wrong on marketing materials.
The kind of businesses that usually need this cover are professionals offering a service or advice, for example: architects, accountants, solicitors and consultants.
Policies can cover you for areas such as: libel and slander, malicious falsehood, misrepresentation, errors, omissions, negligence and unintentional breach of confidence.
The tricky thing with indemnity insurance is that you need to be covered when a claim is made, not for when the mistake is made. This can lead to problems if you plan to cancel your coverage when you cease trading or retire, because somebody could still make a claim against you.
There are a couple of other related types of insurance that you might also want to think about:
Contractors All Risks insurance – this covers anyone involved in contract work (builders for example) against consequential damages – say a spark from a blowtorch that causes a fire.
Directors insurance – directors can be held responsible (both personally and collectively) for a wide range of issues, but if you invest in Directors' Liability cover, the personal liability of the company directors is protected against most forms of civil action taken against them.
These liabilities include health and safety issues, data protection, maintaining satisfactory accounts, ensuring Employers Liability Insurance is in place, fraud and negligence.
Generally these policies aren’t too expensive for small businesses; your most likely area of exposure is a health and safety issue. The insurance should cover the court awards made against directors, settlements and defence costs.
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