Professional indemnity insurance is something which people often do not think of when starting up a business; but failure to have it can lead to financial ruin. Any person in business who offers a service; whether it be advice or practical services and whether it be a profit-making or voluntary service, owes a duty of care by law to all those for whom they perform a service. This statutory duty is the duty to take reasonable care and skill in performing the particular service. Failure to exercise such care will almost always lead to a claim from your client/customer who will probably have suffered loss as a result. We are all human-beings, mistakes happen and people are rarely ‘deliberately negligent.’ However, the client/customer who has suffered loss as a result of your negligence (no matter how accidental the mistake), is unlikely to be so forgiving if they have suffered loss as a result.

So what does professional indemnity insurance cover? You may think that you are all covered with employer, product and public liability insurance, however think again. Professional indemnity insurance covers negligence, fair-dealing, giving misleading advice etc., which would not be covered by a business’s general insurance policy and is often specific to each individual area of business, for example a community group business would need community group insurance

Professional indemnity insurance will protect you and your business against the financial repercussions of third party claims. It will also cover your legal costs, which may be substantial whether you decided to defend the claim or admit it. A much forgotten point is that settling a case – whether inside or outside court – is certainly not without considerable legal expense, and could be your financial ruin if you are not insured.

For some professions, professional indemnity insurance is not an option, it is a condition of being able to practice in the first place. However for those businesses providing services that do have a choice as to whether to have Professional indemnity insurance, the best advice is certainly not to risk doing business without it!