Professional indemnity insurance applies to individuals and organisations concerned in providing services based extensively on personal knowledge and skills.

It protects your corporation against claims for loss by a shopper or a third party in the event you make mistakes and are found to have been negligent.

Typically engineers, solicitors, consultants and accountants carry PII, but many self employed are additionally now selecting to have cover if they provide advice, assist or contract auditing.

What does it cover?

PII covers claims against an individual for a breach of a professional duty but, depending on the coverage, cover can extend to:

• Misleading and deceptive conduct

• defamation

• Breach of intellectual property rights

• Damages arising from fraud

• Defence costs related with claims

Insured amounts can differ from £300,000 to £60m relying on the extent of risk to which you might be exposed.

For those who think of some project disasters, these sums aren’t unreasonable.

What do I have to do?

Prevention is better than correction, so endeavour to make sure you are not in a position to have a claim made against you. This will be keeping updated with current necessities, especially legal ones, in the fields where you provide advice. Areas comparable to administration systems aren’t significantly onerous, but those working in environmental or health and safety administration have potentially higher liability.

One way to minimise the risk of potential claims is to make sure projects are well documented, notably in areas of highest risk and where it is vital your advice is adopted with the intention to minimise the risk to the client. Also, in any communication you need to ensure division of responsibilities is clearly specified and that areas of potential debate are highlighted and dealt with promptly.

Points to consider

The insurer will only respond to claims made while the coverage is live. This means you must be insured each on the time the liability arose (when the advice was provided) and on the time of the claim.

This generally is a significant subject if problems arise a long time after the advice was given and means you must consider insurance in your retirement as well as the need to check when changing insurer that they’ll accept historic liability.

PII does not cover the total range of risks to which a enterprise may be exposed, so always seek advice from a suitably experienced insurance adviser to make sure you have the suitable degree of cover.

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