When running a successful enterprise, business insurance plays a key role. However, with all the different options, it can be difficult to know what coverage your company requires. One of the key types of insurance is liability insurance and within this, professional indemnity.
Professional indemnity insurance is a way to protect your business assets as well as your reputation. It is important to understand whether this type of insurance is required for the type of work your business undertakes.
What is professional indemnity?
The Queensland government defines professional indemnity as the business insurance required to cover negligent acts or errors that occur while providing professional advice or services. As such, any company that is involved in giving out professional advice is likely to need this type of cover as part of their business insurance cover.
When might your company need this type of business insurance?
Choosing the right components for your business insurance can be difficult.
One of the more common reasons for requiring this type of cover is due to breaches of contract, resulting in your business being sued. This could be due to:
- Failing to achieve the results of a contract
- Providing what is interpreted as negligent advice
- Committing mistakes during a service
The Queensland government notes that any service involving the use of some special skill or ability may require professional indemnity. It can help cover any legal costs that may incur as well as any court awards made against your business.
Furthermore, a recent survey by the British Insurance Brokers’ Association (BIBA) revealed that insurance brokers are increasingly prioritising professional indemnity in their own businesses. This highlights the significance of having this protection that even the insurance sector has recognised.
Neville Miles, a BIBA accredited professional indemnity broker at a UK firm notes that only 9 per cent of respondents purchased their cover direct from insurers. This indicates that companies are increasingly using the services of brokers to obtain professional indemnity as it requires a specialist to make the suitable arrangements.
Furthermore, this allows clients to continue doing what they do best – providing service to their own customers – while knowing that they are properly covered.
Choosing the right components for your business insurance can be difficult. Consulting a trusted brokerage can help ensure you understand what risks need protecting and what cover is required to do so.
A broker that knows your business well can offer the best advice on what business insurance is required. For many companies, this will include professional indemnity. For more advice on how to create a business package suited to your needs, contact the brokers at MGA who are happy to help.