If you run a small business where the quality of work you give can be called into question, particularly if you offer a service or advice, you may have already considered Professional Indemnity (PI) insurance.
A claim for negligence can cripple a business financially as well as cause serious harm to the reputation of your business. But there are more reasons, other than professional negligence, for you to have PI insurance. Here’s a few:
Defending a claim – Small businesses, particularly start-ups, are vulnerable to allegations they have failed to perform their service or advice correctly. Not only will few have sufficient resources to defend such allegations, many will have a reputation within their sector which is important for them to defend. PI provides this cover. It’s important for a business to have PI in place as soon as possible because mistakes made in the past won’t be covered and may come back to haunt the business at a later date.
Unpaid Fees – Your own customers can often refuse to pay fees alongside allegations of professional failings. This will be notifiable on a PI policy and the insurer will advise on how best to proceed.
Breach of confidentiality – A business which is party to secret information could face expensive legal fees if its owners are found to have let slip a confidence, even if it happened unintentionally.
Infringement of copyright – Images and music can help presentations & web content to stand out from competitor material. But if you unintentionally use legally protected intellectual property, such as music, images or information, you could run into trouble. PI will pay legal costs and compensation if a claim is made against you.
Defamation – If someone feels that you have made a written or spoken statement that could affect their reputation, then PI can help protect you from compensation and legal costs associated with defending the claim.
Dishonesty of employees – Sadly, carrying background checks on employees isn’t always enough. Fraud or dishonesty by an employee can be very costly. PI will cover you for any liability arising from losses caused by dishonest employees.
Loss of documents – Many businesses now store information electronically, but this information is at risk if computers are stolen, lost or data is lost due to a virus. PI covers the costs of replacing or restoring documents or information that have been lost or damaged.
Court Attendance costs – Court costs can cripple a small business, so PI will help you to defend a claim in court. PI will also pay costs where court attendance is required of any director, partner, principal or employee in relation to a PI claim covered by their insurance.
Cyber liability – This is a growing issue for businesses of any size. SME’s in particular are vulnerable to the costs of claims arising from cyber liabilities. In fact, 60% of small businesses suffered a malicious breach in the past year and half of them had a serious incident. The worst breaches disrupted operations for small businesses for an average of seven to ten days, according to the Government.
Formal Investigation costs – PI is a condition of membership of many professional bodies. PI will cover your defence costs if you are investigated by your professional or regulatory body.
This has been reproduced with permission from AXA Insurance.