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Why Do I Need Professional Liability Insurance?

The main reason that a professional services or consultancy business takes out professional indemnity (PI) insurance or consultants insurance is that a general liability insurance policy will provide cover only for claims regarding bodily injury, personal injury, damage to property and injury to advertising. With professional products and services where claims are made by clients, they are often not of a type included in a general liability insurance policy remit.

These claims areas include damages for losses due to business failings such as misrepresentation, violation of good faith and inaccurate advice given. The actual loss to the client may be more along the lines of, for example, losses due to interruption to their business operations as a result of faulty software supplied. No person, property or injury to advertising may have occurred, but the client has still suffered a loss as a direct result and may seek damages. These are areas that PI insurance is specifically designed to address and provide cover for.

PI insurance provides support to the policy holder for financial losses sustained as a result of this type of claim. It's worth remembering that in addition to any damages that may be payable to the claimant, there will also be legal fees to pay. Together these may potentially total a significant amount, so having PI cover is a sound on-going investment for your business.

For the smaller business, the cost of this cover need not be high, and the potential savings and benefits are definitely worth the premiums. If you do not currently have any business insurance, it may be time to consider taking up a policy. If you have any questions or queries regarding professional indemnity insurance cover, seek the advice of an experienced specialist PI insurer. This ensures you get the most appropriate cover for the particular services your business provides.