Running a business isn’t easy and setting one up is even more complicated, especially if you don’t understand the lingo. Tax, marketing and insurance can leave you baffled if you haven’t had much experience as a business owner and the sooner you can get to grips with these areas, the better. Whether you seek advice of someone in the know or you research for yourself, the subject of business insurance is an important one because it can often mean make or break a business if it’s faced with compensation claims at any point.
This is where Hiscox professional indemnity insurance comes in. While it may not be essential for all businesses, it’s definitely recommended if your business involves providing expert advice to others. Perhaps you’re setting up your own accounting firm, or you are a freelance architect embarking on a solo business venture. If you’re offering professional advice, you need to understand the question ‘what is professional indemnity’ and you need to know why it’s an important cover for you.
The purpose of professional indemnity insurance is to ensure you’re covered, should your expert advice go awry. Even the most experienced advisors across the various industries offer poor advice sometimes, often unavoidably so, and if this advice was to lead to financial loss by the customer, they may have the grounds for a compensation claim because you and your poor advice could be held liable.
Unfortunately, mistakes happen and while you may think that it will never happen to you, it can’t be guaranteed. By taking out professional indemnity insurance, you are covering yourself and your business should the worst happen. Fighting a compensation claim without such insurance can be incredibly expensive – a cost that cannot always be afforded by small and fledgling businesses.
Most good PI claims will help you to cover the cost of the claim as well as the legal expenses. While it isn’t a legal requirement across the board, for some professions it is. Accountants and financial advisors can’t operate without it, while in other professions, it may be a requirement for membership of licensed associations.
Whether it’s a legality or not, if you’re offering expert advice to a customer, PI insurance is recommended; not only will you benefit from the peace of mind but you’re more likely to gain and hold on to customers if they know that you have it.