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Professional Indemnity Insurance why you must have it

Written by: Lawrence Gilbert

Article Overview: If your business provides advice or consultancy you have a responsibility to your clients and any breach of that responsibility could lead to a claim against you, causing serious damage to your business. Luckily there are ways of covering yourself against that.

Professional Indemnity Insurance why you must have it

If you are thinking of starting a consultancy or a professional services business don't neglect to protect yourself. You may be giving the best advice that you can give - but the result may turn out sour. In those cases often the advice recipient, especially if they paid you for that advice, may feel you are to blame.

Professional Indemnity Insurance will protect you against having to pay damages and legal costs should a claim arise against you.

Cover includes:

- Breach of professional duty
- Breach of copyright
- Breach of confidentiality
- Libel and slander
- Loss of documents

How it works.
Professional indemnity insurance is designed to cover businesses in the event that they are pursued by third parties who claim that they have suffered a loss as a result of their professionals negligence.
Examples of how a claim could arise and the costs involved are as follows (in each of these cases the lose was covered by Professional Indemnity Insurance – but think of the cost if it hadn’t) :


An advertising consultant put the wrong telephone number in an advert and was sued for loss of income and damage to the advertisers brand. In this particular case the claimant was awarded £25,000 in compensation. Luckily the consultant had insurance to cover the claim.

A management accountancy practice failed to alert their client to losses resulting from an employee falsifying sales returns. Compensation awarded against them £14,000

A translator made an error in a technical brochure, resulting in reprinting costs and damages for the client's loss of business. Compensation awarded against them £20,000

A graphic designer adapted a drawing from a text book for use as a logo, and was sued for breach of copyright. Compensation awarded against them £35,000

Remember if your business provides advice or consultancy you have a responsibility to your clients and any breach of that responsibility could lead to a claim against you, causing serious damage to your business. Get yourself covered, or you just could lose your business.

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