Suited professional indemnity insurance benefits
The core element of our professional indemnity insurance (PI) for sole traders, limited companies and other self employed is to offer legal protection and, where due, compensation payouts when you face a claim from an unhappy client accusing you of making a professional mistake, negligence or breach of contract. Legal disputes are complex which is why Suited PI cover comes in two parts:
The PI section provides you with a dedicated law firm specialising in commercial disputes. The cover is backed up by an insurer with a superior rating and a reputation for paying claims.
- Up to £2,000,000 cover
- Zero excess
- Dedicated legal team
- A+ insurer
- Competitive prices
Business legal protect
Business Legal Protect is an additional legal protection for tax and other legal issues you or your business may face: unpaid invoices, IR35 investigation, HMRC disputes, reputational damage, and more.
- £100,000 legal expenses cover
- Free tax & legal advice
- Negative PR assistance
- Help with unpaid invoices
- And a lot more
Our guide to professional indemnity insurance
What does professional indemnity insurance cover mean?
If you're self employed, working either through a limited company or as a sole trader, professional indemnity (PI) is a useful legal cover. It protects you if you make a mistake or are accused of being negligent and your client claims they have suffered a financial loss.
They are now making demands and threatening you with legal action. If you have a good PI cover in place, your legal costs associated with the claim (early advice or defence), and any possible compensation should be covered.
Professional indemnity insurance also typically offers 'retroactive cover'. In other words it can extend to cover your past work. For example your client contract says you must have PI insurance but you simply forgot to arrange it. It is possible to buy PI insurance with a retroactive date provided you're not facing a claim situation when you're arranging cover. Another situation when you might need your insurers to agree to cover your past work is when they're taking over from your old insurers. However, bear in mind that not all insurers offer retroactive cover or if they do, it may come with some conditions.
When do I need professional indemnity insurance?
If you are in the business of giving advice, providing consultancy or expertise, you should protect yourself with PI cover whether or not required by the contract with your client.
From time to time everyone has to deal with an upset client and while most conflicts do get resolved amicably, you don’t want to leave yourself exposed to the costs of a possible claim.
Many self-employed and freelancers cancel their PI cover as soon as a client contract is fulfilled to save on the insurance premium. However, this could be a false economy. Sometimes it takes time to discover mistakes and a client may come after you years after you finished your contract with them.
Professional indemnity insurance works on a claims made basis. What that means is that if you don’t have PI insurance in place when the claim is made, you are not protected even if you had PI cover during the contract with the client.
How much PI insurance do I need?
When selecting a PI limit you should consider whether the contract with your client asks that you have PI cover in place. If so, the contract usually states the required limit.
However, you should also take into account the level of responsibility you had or will have for the work delivered and any possible financial consequences as a result of your mistake.
For example if you are an IT contractor who works under the supervision of someone else and you only deliver precisely scoped tasks signed off by your supervisor then the risk of being sued, unless you are negligent, is quite low. On the other hand an IT architect responsible for designing a complex solution for a financial institution is facing a much higher risk of a legal action if something doesn’t go to plan.
Is professional indemnity insurance compulsory?
Professional indemnity insurance isn't required by law but certain professional bodies and regulators insist that their members hold PI cover. And then there are client contracts which often include a condition that the supplier (you) has PI cover in place.
Is professional indemnity insurance tax deductible?
Yes. The whole professional indemnity insurance premium including IPT (12%) is an expense to your business and can be deducted from your revenue. However, Insurance Premium Tax (IPT) is not the same as VAT.
Does professional indemnity insurance cover employees' work?
Yes if they are bonafide employees of your business.
Is professional indemnity insurance the same as directors and officers?
No. Professional indemnity protects you against claims by dissatisfied clients. Directors & officers insurance (D&O) is a legal expense cover to fund the defence costs for a director who is accused of mismanaging a company.
Does professional indemnity insurance cover subcontractors?
SUITED professional indemnity does cover your subcontractors. You should always have a written contract in place with the scope of the work clearly defined and check the subcontractor is also insured for the type of work that they’re taking on.
Business legal protect
- Provides qualified advice on business related legal, tax and negative publicity matters
- Pays legal costs & expenses including appeal costs if you or your business face a legal threat or an HMRC/IR35 enquiry
- Chases up business debts over £200 if your credit control procedures didn’t work
- Included with your Professional Indemnity cover
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