Professional indemnity insurance for home workers Part 2

Protecting yourself with Professional Indemnity Insurance

Specialist insurance broker ConstructaQuote conclude their rundown of professional indemnity insurance started yesterday.

How does Professional indemnity work?



Professional indemnity insurance works by protecting a business or professional from the financial consequences of legal action. Professional indemnity cover cannot rebuild a shattered reputation or mend bridges with clients, but it can pay for damages and legal costs.



The insured need simply pay for cover as required by the insurer. Some policies are retrospective, meaning that they can indemnify policyholders for work undertaken prior to insurance being taken out, but most are valid from the time at which a policy was underwritten or scheduled to come into effect.



In the event of legal action or the threat of legal action arising from a professional mistake, professional indemnity insurance can be relied on to pay the damages of the claimant whilst covering the legal costs of both parties (depending on the terms of the policy in question).



Who needs it?



Some professionals are required by law or by relevant regulatory bodies to take out professional indemnity insurance. Solicitors, accountants and architects, for example, carry out work that comes with great responsibility and considerable risk, which is why they are required to have professional indemnity insurance. Cover is also sought by graphic designers, consultants, writers, PR officers and so on.





How much cover is needed?



Professional indemnity policies usually provide cover for no less than £5 million, but the amount of cover required needs to be weighed against the level of risk involved. The higher the risk, the more cover is required.



Where can professional indemnity insurance be acquired?



Free help and advice can be sought from specialist brokers such as ConstructaQuote. If dealing with insurers directly, it is advisable to check with the Association of British Insurers to make sure that a certain company is a member.