What is professional indemnity insurance?

What is professional indemnity insurance?

Professional indemnity insurance is a form of cover that protects you should a client or customer claim that your service, advice, or design is inadequate, is not as expected or has resulted in financial loss for them. It covers legal costs and other expenses incurred in your defence, as well as damages or costs that may be awarded to your client.

What is professional indemnity insurance for?

No matter how careful you are, or how long you or your staff have been in the trade, mistakes happen despite our best intentions. And with the digitalisation of many of our transactions and daily work routines, those errors can have profound, far-reaching effects that can become problematic quickly.

Professional indemnity insurance is designed to protect you and provide peace of mind should those mistakes happen. Even the smallest of errors can lead to costly legal claims.

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What does professional indemnity insurance cover?

Put simply, professional indemnity insurance provides financial protection against claims of loss or damage made by clients or third parties, arising from your professional services, instructions, or advice. This can include loss or damage caused by professional negligence, for example making a mistake in a piece of work or giving your client poor advice.

Professional indemnity insurance can also cover:

• Unintentional breach of copyright – for example if you used someone’s picture in your advertising without their permission.
• Defamation and libel – such as making a claim about a competitor that is untrue.
• Unintentional breach of confidentiality – this could include sharing confidential client information without their consent.
• Loss of documents or data.
• Loss of money or goods that you are responsible for.

When a claim of this kind is made against you, professional indemnity insurance can cover your legal costs and expenses incurred while defending the claim. It can also cover compensation costs awarded to the client or third party if you are found to be responsible.

What doesn't professional indemnity insurance cover?

While PI insurance covers quite a few circumstances, there are also some scenarios where you may not be covered.

Generally, PI insurance doesn’t cover: 
- Fines and penalties. 
- Any loss to your business that’s caused by mould, pollution, or asbestos. 
- Injury to an employee.
- Injury or loss in a joint venture (only your products/services would be covered by your insurance - not the products or services of a partner). 
- Circumstances that existed prior to when your cover started.

Learn more about the various forms of small business insurance we have available, to see what other forms of cover might suit your business needs.

Who needs professional indemnity insurance?

Many professions are required to have professional indemnity insurance. This is due to the requirements of their industry’s regulatory body and can include accountants, architects, chartered surveyors, counsellors, and some therapists.

Your industry may not require you to have PI insurance. However, without it, you could be liable for thousands of pounds of legal fees and compensation payments, not to mention lost income from the time spent defending any allegation.

You are likely to need professional indemnity insurance if:

- You deliver advice or professional services to your clients (including consulting or contracting).

- You provide designs to your clients (such as working as an architect or design engineer)

- You want to protect against allegations of mistakes or negligence in work you have undertaken for your client.

- You work as a contractor, consultant, freelancer or self-employed professional, and your client has asked you to have professional indemnity insurance in order to undertake a contract.

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Is professional indemnity insurance a legal requirement?

Professional indemnity isn’t a legal requirement, but many potential clients will often only work with businesses or individuals who already have it in place. This also applies to many chartered bodies, who require businesses to have PI insurance if they wish to become members and benefit from all the professional benefits that this brings.

Think carefully about what your business does, and how valuable professional indemnity insurance could be to you. If you provide professional services or advice of any kind, it could be the difference between being covered and having to pay large sums of money from your own pocket should a claim land at your door.

If you need professional indemnity insurance advice, call us today on 0370 218 4509 or get a PI insurance quote in just 90 seconds here.


How much does professional indemnity insurance cost?

The cost of professional indemnity insurance can vary. This is down to several factors, which include:

- How much cover you require. 
- The activities your business undertakes. 
- How much income your business generates.

Markel Direct offers PI insurance cover from £8 a month*. This price is based on an IT contractor requiring £50,000 of professional indemnity insurance.

*Price based on an IT contractor requiring £50,000 of professional indemnity insurance.

Which professions need professional indemnity insurance?

Not all professions require PI insurance, but it should be something you seriously consider if you provide professional advice or services to your clients. This includes a variety of occupations and services including (but not limited to) business and management consultants, IT contractors, teachers and tutors, creatives, marketing professionals, and engineering contractors.

Many regulatory and professional bodies require that you have professional indemnity insurance in place before accepting you for membership – be sure to check first before applying.

What is the difference between professional indemnity insurance and public liability insurance?

Public and product liability insurance is different to professional indemnity insurance for a number of reasons. The most obvious difference is that while professional indemnity insurance covers you for claims brought against you for the work you produce (or the professional advice you provide), public liability insurance covers you against client claims of injury or property damage and loss incurred while at your premises.

Why should I choose Markel Direct for PI insurance?

With over 25 years’ experience in business insurance you can trust Markel Direct when it comes to robust, reliable financial protection. Our experienced solicitors are available 24 hours a day, 7 days a week to give you legal advice when you’re facing a legal claim. There are no hidden fees either – we’re completely transparent when it comes to cost and if you want to change or cancel a policy, you won’t be charged any extra fees.

You can also get a PI insurance quote in as little as 90 seconds when you fill in our easy online form. Just use the button below or call our team today on 0370 218 4509 to discuss your needs.

Cover starting at £8 a month