Professional indemnity insurance pays your legal costs, as well as any compensation payments that may be due, if your client takes legal action against you for a mistake you have made when providing professional services, advice or designs to your client.

The rise in the “compensation culture” in the UK means it is more likely than ever that a claim against you might arise if a client thought you had been negligent in any way, deliberate or wholly accidental.

Without professional indemnity cover in place, you’d have to defend any allegations of mistakes out of your own finances and cover the settlement figure if you lost the case – which is why it’s typically regarded as essential business insurance if you give professional advice to clients as a sole trader or business.

Of course, this could (and usually is) completely accidental mistakes – but we are all human and mistakes do happen.

Professional indemnity insurance (also known as PI insurance or professional liability insurance) is designed to protect you if you make a mistake in a piece of work for a client that causes them a financial loss. It also covers your defence and court costs, which can run into £thousands even before any judgement and/or compensation figure is arrived at.

Examples include:

• incorrect advice
• professional negligence
• incorrect designs
• poor or misleading marketing & advertising
• sub-standard services
• loss of documents or data
• unintentional breach of confidentiality or copyright

These mistakes can cost clients time and money, and they may choose to take legal action against you to recover their costs. Professional indemnity insurance pays the legal costs in defending you, as well as any compensation payments that may be due to your client as a result of your mistake.

You should consider arranging professional indemnity insurance if:

• You provide advice, designs or professional services to your clients
• Your client or industry body requires you to have professional indemnity cover to begin a contract

Examples of professionals that might need PI Cover

• Business and management consultants
• Accountants, surveyors, architects
• Lawyers
• IT contractors and consultants
• Private tutors, gym instructors, fitness trainers
• Technical and engineering contractors and architects
• Marketing professionals – including web designers, graphic designers, marketing consultants and photographers/videographers design engineers

Birkdale Insurance Group have a team of specially trained advisors who understand Professional Indemnity cover and what different sectors require from their PI policy.