Professional Indemnity Insurance:
Insuring Your Advice

If your business provides advice, then professional indemnity insurance (PI) is a must-have cover to ensure peace of mind. Whether you’re a financial advisor, lawyer, accountant, an architect or a consultant giving any sort of professional advice to clients, then PI can protect you from the costs of legal action if your advice causes financial loss.

What Does Professional Indemnity Insurance Cover?

If you offer professional (i.e. paid) advice, then professional indemnity cover can help indemnify you against any legal expenses and compensation pay-outs should you be sued over the quality of advice you have given.
PI claims could lead to large costs – ones that could mean the end of your business. Such is the growing threat from claims that over the past 5 years that, according to the UK ABI, there has been a surge of small businesses and self-employed consultants taking out a policy.

Essentially, professional indemnity is a safety net to the guidance you provide and can cover specific potential challenges such as:

• Breach of duty – a breach of duty is when you or your company fails to live up to the duty you have promised the client. Whether that’s by delivering below par advice or not providing a service that you’d agreed to, a breach of duty could cost you dearly. In some cases, if a claim is brought against you, you could be left personally liable for the costs and any damages. Professional indemnity insurance protects you against these costs, providing great peace of mind for a modest premium
• Civil liability – this specifically looks at the effects of advice or instructions rather than assigning fault with the initial advice. You’ll need civil liability cover if your advice leads to injury or illness as opposed to financial loss. If you complete consultancy work then this will be more relevant to you than, say, a financial advisor or lawyer
• Negligence – every professional has a duty of care to their client. This means they must act and deliver their services to a high standard, taking reasonable care to do so. Due to the Supply of Goods Act 1982, there doesn’t need to be a breach of a specific contractual agreement for you to be liable for negligence. As an independent body – such as a financial advisor – this would fall on you personally and could leave you with large legal costs and compensation claims to pay
• Contractual liability – if you sign a contract with another company and assume liability on behalf of them in your job role, contractual liability could be useful for you. This protects you if you’re held liable for failing to uphold the terms of a contract. This could affect both service-based and advice-based businesses and it could be key to protecting you
• Loss of documents or data – this both applies to losing documents and data or sharing data or sensitive information without prior consent. Whether you’re a solicitor, lawyer or data controller – such as a digital marketing consultant – you could be held personally liable for losing documents or data and face hefty penalties
• Defamation – if you make false or defamatory statements about a person or organisation, you could be held liable for damages. Particularly useful for those in the journalism industry or anyone that regularly makes statements via a public platform such as social media, PR or online marketing

Which Professions Can PI Insurance Cover?

Given the nature of the policy, professional indemnity insurance can cover almost any profession that gives advice. We tend to recommend the policy to:

• Lawyers – as lawyers and solicitors spend their day providing advice, are privy to confidential, often sensitive information and work under civil or contractual liability
• Financial service advisors – they are most likely to need to claim under negligence as the actions and advice of a financial advisor could lead to financial loss for clients
• Accountants and architects – if your actions or advice lead to financial loss for your clients, they could hold you to account personally
• Private tutors – negligence and contractual liability will be the biggest worries for private tutors, who could be held responsible for not meeting targets or providing a service that is not professional or carried out with due care
• Consultants – whether this is to something physical like a building consultant whose advice could cause injury to the public and may need civil liability, or financial and business planning which will be more likely to need negligence cover, if you’re in a consultancy role the likelihood is, you’ll need protecting

Professional indemnity is an important, complex cover and you need to get the right advice to get the right protection. With Sterling Belmont Insurance you can enjoy the perfect combination of local, independent advice and access to the highest-quality insurance policies.