Once you’ve gone through all of the motions and have worked hard to set up your own business, it would be foolish not to do everything you can to protect it, should anything bad happen.
Despite its many benefits, the main reason that many business owners take out professional indemnity insurance is because it acts as a safety net should anything go wrong. This will cover all of the legal costs and acts as a backup should any mistakes be made.
Before you decide that professional indemnity is right for your business, it’s important to make sure that you know a little bit more about it in the meantime.
Who needs PI Insurance?
You may be surprised to find that in many industries, you are actually obliged to take out professional indemnity insurance, as they are relatively high-risk sectors. Even if taking out PI insurance isn’t a necessity, it’s still important to plan for the future and to protect your business.
If you provide a professional service, for example if you give professional or personal advice, or handle sensitive data, then it’s always a good idea to take out PI insurance. It doesn’t matter how careful, how reputable or how capable your business is, there is always room for human error and things that can go wrong.
If a client is paying for a service, then you will find that they are much less forgiving when it comes to making a mistake, so it’s important to make sure that you are taking the necessary precautions should this ever happen.
If anything goes wrong, the insurance will cover any legal costs for the claims that are made against you for financial loss suffered by the client. If you are accused of negligence, infringement or intellectual property rights or even a breach of confidence. So, whether you’re obliged to or not, it’s always a good idea to cover your back in the process.
Mistakes can happen?
No matter how careful, capable and professional you are, mistakes can and will happen. No matter how many preventative measures are put in place, you will find that human error is inevitable. Without the necessary protection, a minor slip up can be the downfall of your entire business.
For example, if there is a failure within an IT system that results in all of your clients data being released, hacked or lost, you could be sued for negligence, even if this was our of your control. The legal fees could lead you down the route of bankruptcy, resulting in all of the hard work you have put into your business reduced to nothing.
Alice Porter works closely with Caunce O’Hara to better-inform business owners and professionals alike on how to protect themselves in a professional environment