By November 3, 2011 Read More →

All you need to know about professional indemnity insurance for home workers

Today’s guest post is by specialist insurance broker ConstructaQuote:

Home business insuranceWhat is professional indemnity insurance?

Professional indemnity insurance is the invisible hand that steadies the ship in troubled waters. One of the most important types of business insurance, professional indemnity ensures that companies, organisations, partnerships and sole traders are sufficiently covered in the event of the insured, or one of their agents, making a serious mistake.

Negligence is the most common cause of professional indemnity claims. However, loss of property (including data and documents), dishonesty and copyright infringement also drive many claims against professionals. Unfortunately, even the most qualified, skilled and experienced of professionals will make mistakes on occasion.

In the majority of cases, mistakes can be corrected or overlooked. Sometimes, however, mistakes are critical to the success or survival of a business, project, event or initiative – so critical as to result in legal action being taken against the errant professional. Professional indemnity insurance exists to protect the insured from the financial ramifications of legal claims.

What types of claim are there?

The types of claim protected by professional indemnity insurance vary considerably. As mentioned above, negligence is the primary cause of legal action in this context. Professionals such as business advisers, trainers and consultants owe a duty of care to their clients.

If they happen to make a mistake that breaches this duty of care and causes an identifiable harm, such as a personal injury or economic loss, legal action may be taken to recover any losses or to remedy the situation in some other way (e.g., by rescinding a contract). Claims can also be made for misrepresentation, dishonesty, intellectual property infringement and proprietary loss.

Why is it so important?

Professional indemnity insurance is so important because it provides cover for claims that could prove ruinous to a business, especially a small firm or sole trader. Without professional indemnity insurance, a professional could be exposed to claims worth millions of pounds, with legal costs running to a similarly high value. Not only does professional indemnity insurance help to protect the insured, it guarantees that legitimate claimants are able to acquire legal redress.

Part 2 of professional indemnity insurance for home workers

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