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Professional indemnity insurance is an effective way of covering yourself if you provide professional advice or legal services.
Professionals such as architects, accountants, engineers, estate agents, consultants, designers and contractors will benefit from purchasing professional indemnity insurance.
Often known as PI insurance, professional indemnity insurance is not always a legal requirement but it can be for some professions. Many trade associations will insist that a professional obtains PI insurance in order to become a member.
PI will cover your business against claims made by a client or a third party in the instance that mistakes have been made or you are found to have been negligent in some or all of the services that you have provided.
By investing in a professional indemnity insurance policy, you will be covered for claims which arise as a result of:
• Negligence, error or omission
• Misplacement or damage to documents
• Unintentional breach of confidence, confidential duty or misuse of information
• Unintentional infringement of intellectual property rights
• Implied statutory terms (e.g. Sale of Goods Act 1979, Sale of Goods and Services Act 1982 and similar legislation)
Examples of incidents that are likely to result in a professional indemnity claim would be:
• An accountant loses documents; the client would make a claim for loss of documents due to negligence, breach of confidentiality and possibly future complications.
• An estate agent claiming a property was double glazed when it wasn’t; the client would claim for omission, infringement of intellectual property rights and the cost of installing double glazing.
• Company Registration agents confirmed that a company could trade under a specific name which was already being used; client would make a claim for negligence and omission damaged reputation.
• An architect puts together a design for a building which included errors such as incorrect measurements; claims would be brought against them for negligence and breaching of confidence.
• Consulting engineers negligent in their design of waste heating and boilers; the client would pursue a claim for error and possibly correction.
• A solicitor discloses confidential information about a client; a claim would be made as a result of breaching confidentiality.