Professional indemnity insurance (PI) makes good business sense if you are a contractor.
It protects your business from expensive claims from a client if they allege that you made a mistake, as well as bolster your IR35 status, indicating that you take financial risks.
PI Insurance can also help you to win lucrative new contracts within the UK’s public sector, because as part of their procurement terms and conditions, many public sector clients demand high levels of PI insurance cover as a contract condition. PI insurance is commonly specified in contracts, standardised agency contracts in particular, as a stipulation for undertaking such agreement.
Government departments such as the Home Office or Department for Business, Innovation and Skills all use large numbers of expert contractors to deliver a range of IT, engineering, management, marketing and financial services. But to ensure maximum protection for taxpayers, public sector bodies often include minimum PI insurance requirements in their pre-qualification questionnaires for tenders.
It is often the contractor best able to present themselves effectively to a client and move quickly, demonstrating they already have PI insurance, who wins the work. So, if you clearly state that your PI is at the level required by the invitation to tender or contract ad, your bid or CV won’t get rejected simply because you haven’t yet arranged your cover.
Different public sector clients are likely to specify various PI coverage requirements. Whereas a local authority assignment to roll out an internal communications campaign could ask for £ 1million professional indemnity cover, a government agency offering a major IT project migrating mission-critical systems to the cloud could ask for £ 5 million or more. Always check you have the level of cover required before bidding or applying.