Professional Indemnity Insurance

There are lots of categories of insurances connected with commercial practice; it’s important you acquaint yourself with the cover provided by each of these types of insurance, and which you (as a sole trader / free-lancer) or your business (Llp/Ltd) requires.


With businesses – you’re protecting two very different concepts. One – the tangible assets – for example employees and property and product; this type of insurance is business insurance. Two – the potential liability of your business in terms of its effects on the public, or its effect on yourself and your employees; this type of insurance is split into two main categories: public liability insurance and professional indemnity insurance. This page focuses on professional indemnity.

After understanding the difference, Mr Insurer recommends you really take the time to understand what is right for you and your business. It’s also worth bearing in mind that there are many other niche types of insurance available too and it will be entirely dependent on the size of your company / how many employees you have / your product / the kind of work you do, that will dictate the types of insurance you will need. For example, if you work as a tradesman, you will need van insurance, specialist tools cover, and goods-in-transit insurance. Bespoke cover. 


In a nutshell, professional indemnity insurance is to protect you if a client/customer claims against you for a financial / reputational / business loss that they claim was caused by work you did for them or provided to them. So, your work might be numbers, ideas, words, advice, tuition, or any service you provide.


Your policy should cover your defence by specialist solicitor and any damages / compensation that’s been claimed against you that you have to pay. Therefore, this insurance can ensure you practise your trade with peace of mind knowing you have business protection. 

Here’s a handy list of examples that this type of insurance protects your business against:

  • Defamation (produce libellous documents)
  • Breach of copyright (includes trademarks and intellectual property)
  • Negligence (if your business makes a mistake / gives wrong advice)
  • Loss / damage to documents
  • Employee cover (if an employee makes a mistake)
  • Breach of confidence (if you disclose information without permission)

If you’re an accountant, architect, consultant, designer, financial advisor or lawyer, Mr Insurer recommends this type of insurance is necessary for you to safely practise your trade. In other words, any work that is providing service or advice to others is the type of business.

There are some trades for which regulatory bodies requires you/your business to have professional indemnity insurance, however, it is NOT a legal requirement. If you’re working for a business in the private or public sector, they should provide you that insurance as part of your employment contract (though Mr Insurer recommends you always read your contract carefully and check). If you’re working for yourself or set your own company up, it is really vital you learn about the insurances you should have, in order to safely practise your trade.

Both the comparison sites and direct providers provide explanations on each of the types and it is worth browsing through a few of them and investing your time into ensuring you invest in the right policy for you. These sites include Money Supermarket and Compare the Market.

The thing to remember if the thought ever occurs to you that “insurance is a waste of money”, is that without insurance – if you need to defend yourself – the smallest of claims could still have a significant cost implications. In post Brexit tough trading climates it is prudent to protect yourself and your business for a monthly cost. If you take time comparing insurance providers and ensure you are only buying the cover you need you can have peace of mind and focus on growing your business!

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