We’ve blogged quite a bit already about lawsuits being a headache for companies, especially for small businesses and startups. But what is so specific about Professional Indemnity (PI) insurance that you would need to consider taking out this policy?
If your company provides any of the following, you should listen up:
- Advice in the form of consulting such as management consulting or recruitment consulting
- Services such as tech development or project management
- Fitness instruction at a gym or studio
Here are the key reasons why you should be considering this policy.
1. Mistakes happen
No matter how good you are at your job, even professionals make mistakes. That’s just part of life. Unfortunately, sometimes mistakes can be extremely costly, ending up with a lawsuit. Also, you might use subcontractors or consultants who might mess up and you may take the blame for their mistake.
2. Customers can always claim against you even if they signed your T&Cs
You most probably have a contract in place with your customers that states the parameters of your work, responsibilities and expectations. You might even get your clients to sign a waiver as part of your T&Cs as a fitness studio or a gym that you will not be liable for any injury if your clients choose to participate in classes. Whilst all those things are good preventive measures, unfortunately if something goes wrong, customers can still sue you whether it’s your fault or not. That of course will immediately result in legal and defence costs racking up.
3. Your clients request that you have PI insurance in place
Many clients, especially enterprise clients will request that you have a PI policy in place before they sign a contract with you. This is especially the case for consulting or tech providers. They want to make sure you have the right protection in place in case you for example lose or misplace their confidential documents. If you have a PI policy proactively in place, it helps reassures potential clients that you are adequately protected and can speed up the tender process. It moreover boosts your image as a professional company which is an added bonus.
At the end of the day, insurance is there to safeguard and protect your company. Legal risks can be detrimental to the longevity and viability of a company. PI insurance is therefore a no-brainer cover needed for the three categories of companies, not only from a business protection standpoint, but also as a way to ensure your own business development.
Get in touch with us if you want to find out more and get a quote for your particular business. The key things insurers look at is the nature of business, your typical client contract size, revenue earned, and whether you have key risk management controls in place.