Professional indemnity insurance explained – a simple guide to PI insurance
What is professional indemnity insurance?
Professional indemnity insurance, often referred to as professional liability insurance or PI insurance, covers legal costs and expenses incurred in your defence, as well as any costs that may be awarded, if you are alleged to have provided inadequate advice, services or designs that cause your client to lose money.
Example of a claim.
A graphic designer was briefed by their client to provide price tags that would fit round the stem of Christmas trees. The tags would need to withstand exposure to the elements and stay fitted to the tree while it grew. The tags did not survive the test of time; the ink ran, rendering them useless to the client. The client lost money due to this oversight and took legal action against the graphic designer for professional negligence. The graphic designer’s professional indemnity insurance policy covered their legal costs and compensation payments to the client, a total cost of over £3,000. The client didn’t pursue their claim for the full cost of the labels; if they had, the claim could have cost as much as £100,000.
Do I need professional indemnity insurance?
Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for thousands of pounds worth of legal fees and compensation payments – not to mention lost income from the time spent defending any allegation.
Professions that might need professional indemnity insurance include (but are not limited to):
How much does professional indemnity insurance cost?
The cost varies depending on a number of factors, including the amount of cover, but Markel Direct offer PI insurance cover from £10.60 a month (or £106 a year) for a wide range of professionals. Still confused by professional indemnity insurance? Call us on 0845 688 2500. We are professional indemnity experts and will be happy to help with any questions you might have.