Professional Indemnity Insurance

Professional Indemnity Insurance has historically been the domain of businesses like architects, journalists, solicitors, surveyors, engineers, accountants and financial advisers. However, in recent year’s new professions such as e-commerce, programmers and internet service providers have found that Professional Indemnity Insurance is an essential part any business risk management strategy.

What's covered by professional indemnity insurance?

Professional Indemnity Insurance also known as PI insurance or professional liability insurance protects you if claims are brought against you for providing advice or a professional service to customers/clients, as well as for handling client data or intellectual property.

 

Which basically means that it protects you if you are negligent or make a mistake that causes a financial loss to a client’s business.

Some areas that could lead to legal proceedings are:

  • Intellectual property: unintentional infringing on copyrights, trademarks, broadcasting rights, any act of passing off.
  • Negligence: or breach of duty of care
  • Dishonesty: liability arising from the theft of your client's money.
  • Documents/Data: damaged, stolen or lost data/documents belonging to your clients.

Professional Indemnity Insurance will pay all reasonable costs incurred in the defence (e.g. legal fees) or settlement of such claims arising from the above.

Who needs professional indemnity insurance?

 

For lawyers, accountants and financial advisers Professional Indemnity Insurance is compulsory.

In general terms anyone who supplies advice or services such as consultancy should consider professional indemnity insurance.

Professional Indemnity Claims Examples

The following examples highlight the importance of Professional Indemnity Insurance.

 

STRUCTURAL DESIGN ERRORS LEAD TO £110,000 CLAIM
Detailers prepared structural drawings for the erection of steelwork. It was subsequently alleged that the drawings contained errors and £110,000 was claimed for the cost of alteration and the resulting delays in construction.

 

TRADE NAME ADVICE COSTS AGENT £20,000
After consulting with company registration agents, a business was told that they could trade under a particular name. Following the business launch proceedings were issued by a company with a similar name and £20,000 was paid in compensation by the agents.

 

DEFECTIVE RENT REVIEW NOTICE COSTS ESTATE AGENT £50,000
An estate agent who missed the opportunity to carry out a rent review because of a defective rent review notice. The claim was settled for £50,000.

 

CONSULTANTS DESIGN ERROR LEADS TO CLAIM OF £600,000
Fuel economy consultants were allegedly negligent in their design of heating and lighting for a factory. Substantial remedial work was required, resulting in a claim for £600,000.

 

£4,000,000 CLAIMED FROM ENGINEERING CONSULTANTS
Consulting engineers were found to be negligent in their design of waste heating boilers. A claim for £4 million was brought for the cost of extra work and the resulting delays.

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