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Published 01 June 2022
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Who Needs Professional Indemnity Insurance?

You might be surprised by the list of businesses who need to consider professional indemnity insurance. From accountants and solicitors to interior designers and private tutors, there are a range of professions that could use the protection provided by a comprehensive professional indemnity policy.

Giving good advice can change someone’s life. Giving bad advice, on the other hand, can get you in a lot of trouble – and potentially cost you a lot of money.

If your business requires you to give advice, or if it involves situations where you could be accused of negligence, you may want to look into professional indemnity insurance.

Read on to find out if you need professional indemnity, when you need it, and why you should consider taking out a policy.

» MORE: What is professional indemnity insurance?

Do I need professional indemnity insurance?

Although professional indemnity insurance isn’t a legal requirement, your business may still potentially need to take out a policy. Certain organisations or professional bodies make it a condition of their membership, while some clients may refuse to do business with you unless you have a professional indemnity policy in place.

Even if that isn’t the case, you could consider professional indemnity insurance if your business engages in any of the following activities:

  • providing advice or consultancy services
  • providing designs to your clients
  • dealing with copyrighted materials
  • dealing with sensitive or confidential customer information
  • providing services where the quality of the end result is subjective
  • providing services that could leave you exposed to claims of professional negligence if they were to go wrong, or you were to make an error

» MORE: Do I need business insurance?

When is professional indemnity insurance required?

There will be times when professional indemnity insurance isn’t just recommended, but required, for your business to operate as intended.

As mentioned, this could be due to a client insisting on it before they sign a contract, or because the regulatory body or organisation you need to join for your business to function demands it.

To show the range of businesses that could need to take out a policy, here are some examples of organisations that typically require professional indemnity insurance as a condition of their membership:

  • Financial Conduct Authority (FCA)
  • Solicitors Regulation Authority (SRA)
  • British Institute of Professional Photography (BIPP)
  • Association of Chartered Certified Accountants (ACCA)
  • Chartered Institute of Management Accountants (CIMA)
  • British Association for Counselling and Psychotherapy (BACP)
  • UK Council for Psychotherapy (UKCP)
  • Architects Registration Board (ARB)
  • Royal Institute of Chartered Surveyors (RICS)
  • Royal College of Veterinary Surgeons (RVCS)
  • Engineering Council (EngC)

» MORE: Professional indemnity insurance costs

Which businesses need professional indemnity insurance?

There is a long list of jobs where taking out professional indemnity insurance may be a priority. These include:

  • accountants, and other financial advisers
  • IT consultants
  • business consultants
  • chartered surveyors
  • architects
  • interior designers
  • engineers
  • graphic designers and web developers
  • lawyers, and others in the legal profession
  • recruitment agencies and consultants
  • freelance contractors or consultants
  • healthcare professionals
  • PR and advertising agencies
  • tutors and private teachers
  • fitness instructors

» MORE: Solicitors’ professional indemnity insurance explained

Why should I get professional indemnity insurance?

While no one likes to dwell on what could go wrong, there are a number of common business situations where you might be relieved to have professional indemnity cover in place.

Say you are a graphic designer, and accidentally use a copyrighted image when doing some work for a client. If that client was then hit with a copyright claim, they may come after you for compensation. Professional indemnity insurance could pay for those costs with the right cover in place, as well as any legal fees that arise over the course of the claim.

Or what about if you are a private tutor, and the parent of the child you have been teaching isn’t happy with their exam results. Once again, professional indemnity insurance could kick in if the parent makes a claim against you.

As an accountant, you may give a piece of advice to a client that ends up costing them money. The same is true if you are a business consultant or a lawyer. Across all three professions, professional indemnity insurance could come in handy.

And of course, it is easy to imagine how the designs produced by an architect, engineer or web developer may be a source of conflict between you and your clients, leading to a situation where the protection provided by professional indemnity insurance comes into play.

With this in mind, it is important to look carefully into the risks associated with your specific business and assess whether or not professional indemnity insurance is the right fit.

If you do decide you need to take out a professional indemnity policy, it is also a good idea to make sure the level of cover you choose is right for your particular business needs.

Image source: Getty Images

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