Professional Indemnity insurance explained

Posted 24/09/20

With the number of self-employed people growing their own businesses and offering an increased range of services, there is a growing need to check that you have correct insurance and are always acting correctly alongside following standard procedures.

What is Professional Indemnity Insurance?

Professional indemnity insurance is a type of insurance for businesses that provide information or advice to clients or handle client data. Importantly, it can cover compensation claims if businesses are sued by a client for financial losses due to a business mistake. It can also be known as personal liability insurance.

For example, it could help to cover claims for:

Compensation and legal fees

Third party compensation for physical injury (if caused by your negligence in performing professional duties)

Consequential loss

Mistakes made by your employees


Budget overruns

Data breech

Do I need professional indemnity insurance? 

Any business that provides a service should consider taking out professional indemnity insurance. Your business could be vulnerable to a negligence claim where a service fails to meet a client’s expectation, and this insurance can help you. It is often a requirement from a professional body membership or contract that you are bound by to have the insurance to practice and you may find clients will not agree to work with you if you do not have it.

Where might it be required?

An example of a requirement for professional indemnity insurance is in the construction sector. Currently there is an increased demand for constructions insurance cover due to the increased community development across Britain. Construction work is high risk and can often attract high premiums due to the time and cost the work requires in its design. Other work areas it may be required include:

Business management

Training consultancy

IT contractors

Financial contractors

Energy sector


Legal sector


Posted 24/09/20

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