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Protect your company against claims of professional negligence
Most contractors will be confident in their own experience and the quality of their work. However, it is by their very nature mistakes are hard to predict, and they do happen. Should the worst occur, it is important that you ensure the correct insurance is in place. UK Professional Indemnity insurance provides contractors with protection in the event a claim is brought against them as a result of negligence, or alleged negligence, on their part.
What is UK Professional Indemnity Insurance?
Professional Indemnity Insurance or PI insurance is useful for any professional providing services or advice to a third party. It is designed to provide you with cover in the event that a claim is brought against your limited company relating to financial loss sustained as a result of any error or omission in the service provided.
|For example, an IT contractor provides services to a client by updating their website. Due to a small error in the website’s coding, the website and online shop malfunctions and are no longer accessible to customers. This error persists for a day until it can be remedied. |
The client may be able to raise a claim against the contractor for the loss of income sustained on that day. In this instance, any Professional Indemnity Insurance held by the IT contractor would react, providing them with defence of the claim and, if held liable, cover the cost of damages awarded to the client.
Am I legally required to have Professional Indemnity Insurance in place?
Whilst you are unlikely to be legally required to have UK Professional Indemnity Insurance in place, we often find it stipulated in contracts.
If it is a contractual requirement for you and the correct levels of insurance are not held, you could be found in breach of your contract.
Holding contractors’ professional indemnity insurance is also specifically required in certain professions. For example, accountants, financial advisers, and solicitors. In fact, it tends to be a popular insurance choice for anyone giving professional advice or services as they are at higher risk of a professional indemnity claim.
What does Professional Indemnity Insurance cover?
UK professional indemnity insurance provides a contractor with cover for the cost of defence and any liabilities found owing up to the limit of indemnity.
Examples of types of claims covered by UK Professional Indemnity Insurance:
- Professional negligence.
- Loss of documents or data.
- Libel and slander.
- Unintentional breach of confidentiality.
- Unintentional intellectual property infringement.
This type of policy will react to claims made during the period of insurance. In other words, when you make a claim on the policy as opposed to when the incident leading to the claim occurred. It is for this reason that these types of policies should be kept in place as long as there is an exposure to risk.
Understanding the risks: How much Professional Indemnity Insurance do I need?
The level of cover required will vary from business to business. If it is not stipulated within your contract, you should take into consideration the size of your company, the size of your client, and the level of risk exposure relative to the services you provide.
You should take care to assess the risks your company is open to, take qualified advice where needed, and purchase insurance accordingly.
Other policies to consider
There are a few other contractor insurance policies that contractors should consider having in place to protect their companies from the day-to-day risks of service provision.
Covers where a third party seeks to claim against your limited company relating to physical injury or damage to property caused through the provision of services.
Covers where a claim is raised against your limited company relating to the injury, illness, or accidental death of an employee.
Offers varying levels of protection from the threat of tax investigation by HMRC.
Where can I buy Contractor Professional Indemnity Insurance?
Award-winning contractor insurance specialists and leading IR35 experts, Qdos, offer quick quotes at competitive premiums for your Professional Indemnity Insurance.
There is now a 10% discount available on PI insurance to Contractor Advice UK members and visitors. Please use Discount Code CAUK10 when entering your details at the payment stage to receive your 10% discount on contractors’ Professional Indemnity Insurance.
Take a look at the Contractor Advice UK group on LinkedIn for regular updates: https://www.linkedin.com/groups/4660081/
Frequently Asked Questions
Head of Insurance
Insurance Specialist at Qdos Contractor
Elliot Fox is the Head of Insurance for leading contractor insurance specialists, Qdos Contractor. He is a Chartered Insurer and has worked with Qdos for over 10 years leading the development of insurance policies tailored to the risks faced by UK limited company contractors.
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