Professional indemnity insurance, or PI Insurance as it is more commonly known, provides vital protection to you and your business from the costs involved with negligence claims made against you and your company. The time to purchase PI Insurance isn’t when you need it, but before you need it! So what are the top 5 misconceptions surrounding professional indemnity insurance? We’ve looked into this further to help you out.
1) If my business is based online only – I don’t need Professional Indemnity Insurance
False, if your company is based online and you make sales from home or anywhere which doesn’t have a physical shopfront, you still need insurance and professional indemnity insurance specialists liverpool can help find you the best policy. This policy will pay for any loss caused by negligence to customers or business associates of your company. For example: If you send out a faulty product that causes damage to somebody’s property then it would be covered by Professional Indemnity Insurance.
2) Professional indemnity insurance is expensive
It’s true that professional indemnity insurance is relatively expensive when compared to, say, public liability. However, what you need to understand is that professional indemnity insurance is not as expensive as it might seem in theory. This is because professional indemnity insurance premiums are calculated based on your past claims history and risk profile.
So if you have never made a claim before, then your premium will be lower than someone who has made several claims in their career so far. If you take good care of your clients and ensure that they are satisfied with your work, then there will be no reason for them to make a claim against you; therefore, there will be no reason for your premiums to increase either!
3) If I am not a sole trader I don’t need Professional Indemnity Insurance
Sole traders often believe that if they operate on their own, they don’t need Professional Indemnity Insurance. They assume their business is not big enough to get sued, or that it’s a one-man operation so professional indemnity insurance is not necessary. This couldn’t be further from reality, as sole traders are more at risk of being sued than any other type of trader. In fact, many sole traders find themselves having to defend themselves against a claim without construction insurance.
4) My accountant takes care of it
Professional indemnity insurance is a necessity for professionals and businesses, but many accountants fail to include it in their clients’ policies. Make sure you ask your accountant if professional indemnity insurance is part of your policy.
5) My business won’t suffer any loss
The most common misconception is that professional indemnity insurance is not required for small businesses. But it has become mandatory in all countries because even a small error or accident can lead to a huge loss of money. So, it is mandatory for all professionals to take such type of insurance to protect their interests as well as their business. If you are running a business, you need professional indemnity insurance regardless of whether your company’s turnover makes any profit or loss.