If you own an SME (small medium enterprise) business then you may want to consider having professional indemnity insurance. This type of insurance is aimed at businesses that give advice, guidance or a professional service. It is essential that these types of business have cover in place to protect themselves in the event that a claim is made against them by a client, for any errors or mistakes made in the advice or the professional service provided. Not having this form of insurance can end up costing your business heavily or indeed may cause your business to go bankrupt with legal fees.
Who can benefit from Indemnity Insurance
The kinds of businesses which may benefit from professional indemnity (PI) cover include:
- IT consultants
- Management consultants
- Education consultants
- Financial services and planners
- Recruitment consultants
- Service Industries such as massage and therapy
In fact any or all of these are businesses where a client will seek specialist knowledge, experience and capabilities all carry potential risk for significant financial or business damage to their clients if errors are made, for which these clients may claim compensation. There are a number of different PI insurance products available which are tailored to take into account industry-specific risks which many arise during usual business activity. In the event of a claim being made against a business this cover can provide the financial resource to remedy or rectify the situation with the client, without the further risk of a significant drain on business cashflow and profits.
Legal Requirements for Indemnity Insurance
Some businesses must have pi insurance as a stated requirement within their professional codes of practice or are legally required to do so. It may be very advisable to seek legal advice inside your country to verify this. Even if your business type is not one of these, it is still in your best interests to have cover to ensure that your business will continue to thrive even if a claim is made. It’s also worth remembering that not all claims are upheld but legal costs may still be incurred in order to prove this. With PI insurance cover in place, your business does not need to suffer as a result.