Research has shown that many new businesses take the risk of delaying the purchase of it for up to six months after setting up their business.
The research also showed significant differences between industries with accountants snapping up insurance immediately whilst freelancers in the design, digital and social media management sectors were most likely to delay the purchase.
What is professional indemnity insurance?
Whether you’re a personal assistant or professional solicitor you need professional indemnity insurance. It covers you in circumstances where you make a mistake and that mistake causes loss or damage to your client or a third party. In these instances your client may decide to claim against you and professional indemnity insurance protects you against any costs if you’re held liable.
A simple mistake or misjudgement can have expensive consequences. A single claim can spell the end of your small business and personal indemnity insurance protected against this risk through covering the costs of legal bills and related costs.
Who needs professional indemnity insurance?
Professional indemnity insurance is an investment all small businesses should consider. Whether you offer PA services or any advice, skills or knowledge based business then professional indemnity insurance is something that should definitely be on your checklist in the early days of your business.
Some professions have a regulatory requirement to take out professional indemnity insurance. Accountants and solicitors for example must have a certain level of insurance to practice.
What happens if I don’t have professional indemnity insurance?
If you do not have professional indemnity insurance then your business is at risk from claims from disgruntled clients. The majority of claims come from clients directly but could be from third parties and even the smallest mistake can be enough to cause irreparable damage.
The total cost of a mistake and the claim thereafter isn’t always limited to the settlement. Legal fees often result in the cost becoming much larger than initially thought but a good professional indemnity premium will cover all these costs too.
Is it Expensive?
The cost of professional indemnity insurance is highly individual. It will depend on a range of factors including your business’ nature and its legal history. New businesses should have no trouble finding an affordable solution and when you consider the risks without it, it’s certainly worth a monthly premium.
It’s important not to always opt for the cheapest offer however as you need to ensure your business is covered completely for every potential risk. You may be able to purchase your professional indemnity insurance in a package with the other insurance’s your business needs. You may need product liability, employers’ liability or public liability insurance for example, depending on the nature of your business. Combined business insurance policies are available if that is the case.
Thousands of start-up businesses overlook the importance of professional indemnity insurance but if you are unfortunate enough to be the subject of a negligence claim, you’ll wish you had it firmly in place.
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