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How professional indemnity insurance safeguards your business

We read about it all the time. A deal goes sour and a business gets hit with accusations of negligence or even misconduct. Damages claims can run into millions but even if they don’t the cost to a company’s professional reputation in lost business can be incalculable.

Professional indemnity insurance protects a provider of business services from both scenarios. It’s absolutely essential, even if you’re a sole trader operation.

Who’s a professional?

You don’t have to wear formal business attire to be professional. The term applies to any individual or business that provides a service that involves expertise. It could refer to a consultancy and equally to a dressmaker.

If there is any chance that you or your staff could omit some aspect of a service or that one of your customers could find a reason for being less than satisfied, you may need professional indemnity cover. Everyone makes a mistake occasionally, and some people will find fault no matter what you do.


Regardless of whether your business is at fault or not, you need to be able to make this kind of trouble go away ‒ quickly, before it damages your reputation. This calls for two-pronged capability:

  • being able to pay legal costs of defending yourself against a damages claim
  • paying out an agreed settlement sum.

Depending on your industry, you may already be required to take out professional indemnity insurance to comply with statutory regulations. In some sectors, such as hairdressing, it’s up to your own discretion.

In either case you need to be confident that your insurance cover is both adequate and fit for purpose. That’s why it makes sense to get expert advice from an insurance broker.

Why use an insurance broker?

  • Compliance: If you operate in an industry that specifies a certain level of professional indemnity cover, you need to be sure that you meet the requirement.
  • Adequacy: The policy should completely cover all the business’s entities and personnel.
  • Paperwork: A broker can also guide you in preparing duty of disclosure information about your business.
  • Fit for purpose: A broker will use their expertise to assess which insurance products best meet your needs. The wrong policy could be as bad for your business as no cover at all.
  • Clarity: You also need to be clear about the excess you will have to pay in the case of a claim.
  • Moneysaving: Through their contacts and knowledge of the market a broker can obtain competitive pricing.
  • Relevance: They will update your policy to reflect any changes within your business when it comes time to renew your cover.
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