As a business owner, you spend most of your time searching for forward-thinking workers, generating new ideas, and growing your venture. However, running any kind of business will also require you a certain amount of logistical and administrative tasks, including making sure that your business is properly protected and insured.
Understanding Professional Indemnity Insurance
If your company is handling intellectual property or providing design, advice, knowledge, or skills in a professional capacity, then you’ll need professional indemnity insurance. Also known as professional liability insurance, this insurance reduces legal and financial risks. It provides protection against accidental copyright breaches, designs, or dishonest advice any of which could lead to financial losses for your client and result in a claim against your business.
What Does It Cover?
If a claim can occur, this insurance will cover the cost of your company’s legal defense and compensation that you may owe and It covers a wide range of areas including:
- Data errors
- Faulty or inadequate services or advice
- Infringement of intellectual business property rights or copyright
Also, in the event that your business stops trading, professional indemnity insurance would protect you if a claim arises against your closed business.
Why Should You Get A Professional Indemnity Insurance?
Most business owners think that insurance is just another expense. But here are five reasons to convince you that professional indemnity insurance is a necessity for your business:
1. Mistakes Are Unavoidable
Regardless of how professional your business can be, you’re not immune to making mistakes. Even your most meticulous employee can mess up from time to time.
When mistakes occur, your company will be open to large legal costs and compensation claims from your disgruntled clients. Negligence is a core cover for professional indemnity insurance, protecting against any allegations made by unhappy clients.
2. Protection In The Future
If you work on a contract basis, then it means you’re able to get a job, do it appropriately, get paid, and move on to the next. You might think that once you’re done with a job, it’s no longer your problem. Well, it is.
Your liability doesn’t stop when your contract does. Mistakes can manifest after days, weeks, months, and even years. Contract timing and length are irrelevant, and if your mistake has cost your client, then they’ll come after you regardless of how distant in the past it is. This puts you at risk of claims for the long term. Professional indemnity insurance can help prevent this risk, protecting you against short- or long-term claims by your previous or current clients.
3. Peace Of Mind
There’s a lot to consider when you’re running a business, particularly the responsibility of getting things right. If you’re being blamed or held responsible for reputation or financial loss that occurred to a client because of your work or advice, then it can place a great financial and mental burden on your business.
Getting professional indemnity insurance can take away these financial services and legal worries should a claim occur out of a breach of your professional duty, ensuring that your client’s businesses continue to operate as usual. With this protection, you can provide professional services with greater confidence and peace of mind to attain more effective results.
4. Win Tenders
Some government authorities and contractors require businesses to have professional indemnity insurance to apply for tenders. Some professional statutory bodies also ask for this policy as mandatory in order to perform professional services like architects, doctors, lawyers, and marketing consultants.
And even if it’s not a requirement, getting professional indemnity insurance can make your business far more attractive than competitors without this insurance.
5. Handling Intellectual Property And Sensitive Data
The unintentional production of materials that infringe intellectual property rights such as using copyright images to promote business with the permission of the owner can result in your company being sued. A professional indemnity can protect your business against these legal actions and costs.
Also, even with enough data security procedures in place, data can get lost accidentally. It should cover the cost to restore or replace any mislaid or damaged documents, including digital or electronic data.
As you can see, it’s unwise to risk harming your business just because you didn’t take the time to get professional indemnity insurance. Regardless of how careful you are in doing business, mistakes can happen. And you don’t want to offer your business to angry clients on a silver plate. So, make sure to get insured right away, protecting your business in the long term.