As much as you might not want to think about insurance coverage and the risks you face when operating a small business, the below points demonstrate how important professional indemnity insurance for small businesses is and how beneficial it can be.
If you own your own business, are operating as a sole trader or working as a freelancer, there’s a good chance that you, and you alone, are responsible for any legal implications resulting from your work. Plus, it’s fairly standard for any contract you sign when providing a professional service to a third party, to contain a clause that stipulates you are legally liable for the work you are undertaking.
Essentially, this makes professional indemnity insurance crucial for any business owners, or even freelancers who provide services that could potentially result in some form of legal action or a claim being made. Whether legitimate or unfounded, a claim made against you or your business can quickly become expensive. Why? Well, there’s investigating, defending and settling claims involved in the process. That’s not cheap. Furthermore, any damage done to your reputation can also result in severe financial strain.
Sadly, even if you’re the best at what you do and have a stellar track record of satisfactory to excellent work, you’re still not free from risk. Even one claim, or legal complaint against you is all it takes for your financial situation and business to take a turn for the worst. But, luckily, professional indemnity insurance can help protect you against these professional risks, so you can go about your day-to-day work without having to worry about the ‘what ifs’.
Quite simply, Professional indemnity insurance is designed to cover you financially in the event a claim is filed against you because of any mistakes, accidents, or omissions that occur or were made as a result of your professional services. For instance, professional indemnity provides coverage for claims of the following nature:
So, to give you a better idea of how professional indemnity insurance works, let’s take a look at what is and isn’t covered. First of all, what is and isn’t covered in a policy of this nature will depend on the specific policy; however, the following things are usually included:
Now, while professional indemnity insurance policies are usually quite comprehensive, keep in mind that it doesn’t usually cover things insolvency, terrorism, intentional damage and etc. For a clearer idea of what will and won’t be covered in any potential policies, make sure you talk to one of our business insurance brokers at F.D Beck before you sign on the dotted line of a potential policy.