Professional Indemnity insurance, Public liability insurance and Property and contents insurance

These insurances are advisable for most businesses.

Professional Indemnity insurance

Professional Indemnity Insurance - why bother?  Professional indemnity (PI) insurance protects you against your legal liability for losses suffered by your customers as a result of your negligent advice. It is legally required in certain professions, such as law, accountancy and financial services. It is common in other areas, such as management and computer consultancy, publishing, engineering design and marketing. If you give any advice which could make you liable, or if you are working in a collaborative arrangement, you should have a suitable policy.

These examples of recent PI claims highlight the costs you could potentially incur if you don’t have PI insurance:

• IT Consultant - a computer system that an IT Consultant designed and installed was unable to cope with the required number of users. Compensation awarded against him was £750,000.
• Marketing Consultant – a Marketing Consultant inserted the wrong telephone in an advertisement. The result was a loss of sales and damage to his client’s brand. Compensation awarded against him was £200,000.
• Consulting Engineer - a Consulting Engineer designed a roof which proved to be defective. Compensation awarded against him was £1,350,000.
• Accountant – a management accountancy practice failed to alert their client to losses from an employee falsifying sales returns. Compensation awarded against them was £450,000.
  

Public liability insurance

Even if you work from home, you may need public liability cover. If clients visit you there, the policy will cover you if they injure themselves while they are on your premises – it could be something as silly as tripping over a computer cable.

If you regularly work off‑site, your policy should cover this too.

Property and contents insurance

You will need to insure your business property, including premises, fixtures and fittings, stock, computers and equipment. If you work from home, you need to check that equipment used for business purposes is still covered by your home contents insurance, or purchase specific business insurance.

In response to a growing trend in homeworking, an increasing number of insurers now offer buildings and contents policies that specifically include cover for business stock and equipment.

See also:

• Specialist freelancer/contractor insurance providers
• PCG's Guide to freelancing
• PCG's Guide to insurance