For some small businesses cash flow is critical to survival. Many business owners will scrutinise their monthly expenditure and trim this back to the bare minimum, particularly if the business is going through a rough patch. Professional indemnity insurance (PII) is one cost which some business owners think they can do without. However, in practice this could be one of the most costly decisions you could make.
What’s the point of PII?
Businesses take out PII to protect them against any claims which they may receive from their clients. These claims could arise because of:
- negligent advice you have given;
- something you have produced isn’t fit for purpose; or
- the quality of service you have provided was very poor
In all these circumstances, if your client has suffered financial loss as a result, they can make a claim against you to try and recover their costs and their legal fees. In some cases this could be tens of thousands of pounds, which for many small firms could put them out of business. Most insurers let you spread the cost of PII in monthly payments, so is really worth the risk of not taking out adequate PII cover?
Additional reasons to take out PII
If the cost of a potential future claim doesn’t concern you (but it should!), you may also want to consider the following reasons for taking out a PII policy:
It may be compulsory for your business – some professions such as solicitors, accountants, surveyors, IT professionals and business consultants are required to have PII to comply with their regulatory bodies – does this apply to your business sector?
If you’re tendering for contracts with either public or private sector firms, most we will want to see evidence of all your insurances, including PII – can you afford not to win that contract, just because you saved a few hundred pounds on your PII insurance?
The best businesses take out PI insurance as they recognise doing so as good business practice. As well as protecting themselves, they are protecting their clients.
If you’re still undecided about taking out PII cover, talk to one of our advisers who would be happy to conduct a free client profile on your business and advise what type of cover and associated costs would be involved. Call us today on 0345 251 4000.