There is nothing certain in this world but taxes and death. For David Gordon from The Register, people need to start thinking the same as a business. Anyone can be subjected to lawsuits, liable to legal fees and compensation costs which is why a professional indemnity insurance has to be sorted out.
Nick Breton, the Head of Direct Line for Business, wrote an FAQ regarding professional indemnity insurance.
About professional indemnity insurance
Professional indemnity insurance is often called PI insurance. It covers the legal costs and expenses incurred during a defence, including the costs or damages which may be awarded, if one has been alleged to have given sufficient advice, ideas or services that caused clients to lose their money.
People needing PI coverage
The professions that need a PI cover include (but not limited to): business and management consultants; IT professionals including developers, programmers, consultants and contractors; HR and training consultants; freelance marketing and media consultants; and accountants.
PI insurance’s relevance to small businesses
A PI insurance is extremely relevant to any small business. A client may rely on an advice from a small business. When this is found as faulty or an incorrect process is followed, a client can come back with a claim for the losses suffered. It is important that a small business owner looks into a PI insurance.
According to Breton, a PI insurance gives a business its competitive edge. Any service based business that pitches themselves in order to secure contracts are definitely deemed more attractive – a PI insurance shows a business being responsible.
Public liability insurance vs PI insurance
Public liability provides a cover for claims started by people during accidents, injuries or illnesses. PI insurance provides coverage for advice, ideas or services. It is best for businesses to have these two kinds of cover.
While professional indemnity insurance has different names – accountant insurance for CPAs, or medical malpractice insurance for physicians – depending on an industry, the idea is the same. It covers the legal costs when sued and costs from damages which is why it is very important for individuals and businesses to have tax audit insurance coverage.