As a professional in design, projects and equipment for the foodservice, catering and hospitality industry, when you offer to carry out a service you must be able to provide an adequate degree of skill, with enough knowledge and experience to responsibly advise about the work you undertake.

If you are unable to carry out this service to the standard expected, you can be held liable for any loss or damage to people or property caused as a result of your work. And having a professional indemnity insurance policy can help protect you against any potential claims, including legal defence.

Marsh Commercial has answered some of the common questions businesses are googling about professional indemnity insurance, including who needs PI insurance and what it covers.

What is professional indemnity insurance?

Suppose you’re responsible for causing financial loss to your client because of errors or omissions in the advice or designs you have provided. In that case, your PI insurance policy covers the legal costs and expenses involved in defending a claim and compensation payable.

What does professional indemnity insurance cover?

PI insurance coverage depends entirely on your policy, so you’ll need to ensure it provides adequate cover for the professional services you provide and the risks you may face. For example, this could include:

• Civil liability (such as damages and costs) for breach of duty.
• Legal fees and expenses in defending a claim.
• Helplines to help you manage risks.
• Relevant regulatory body requirements.

Not all PI insurance policies are the same, and Marsh Commercials always advise you work with an experienced PI insurance broker to ensure you have the cover you need.

Do I need professional indemnity insurance?

While you strive to deliver the best service to your clients, occasionally mistakes can happen. PI insurance protects you and your business if your client alleges a financial loss for:

• A breach of a professional duty of care or unintentional breach of contract.
• Unintentional breach of confidentiality and copyright.
• Loss of documents or data.

How much professional indemnity insurance do I need?

Every business is different, and there isn’t a one-size-fits-all PI insurance policy. Marsh Commercial always advise working with a broker who has experience of arranging PI.

Often, specified levels of PI insurance cover and limits may be written into client contracts, so your broker may ask you for this information. As a professional and expert in your field, you do your best to limit your liability. However, it’s very difficult to predict if a client will make a claim. In many cases, professionals will opt for higher limits for peace of mind and protection should a claim cost them more than they anticipate.

How much is professional indemnity insurance?

The cost of PI insurance will vary from business to business. The insurer will consider many factors, including:

• The level and type of covers required.
• Number of employees.
• Annual turnover.
• Risks associated with your industry.
• Your activities (some might be higher risk than others).

Because of these variables, there’s no average premium.

What should I look for when choosing a professional indemnity insurance provider?

Many providers offer PI insurance, but it’s important to carefully select a provider that can meet your business needs. Some key considerations to keep in mind when choosing a provider include:

• Can the policy be tailored to suit your business?

Some professions require specific protection or covers. You may avoid paying an additional premium for cover you don’t need if the policy is tailored to your business.

• Does the provider understand your business?

Marsh Commercial recommend working with a broker with expertise and experience in PI insurance. It’s important your insurance broker is familiar with professional services and understands the complexity of the risks involved in your business activities. Working with a PI specialist will help ensure you have the right level of protection in place and that you only paying for the cover you need.

• Is there an option to pay by monthly payments?

Sometimes it’s possible to pay your premium in instalments. This is an excellent option for new or small businesses that are still wary of cashflow or want to spread the premium cost throughout the year to help better manage their cash flow.

• Does the provider have a good reputation?

It’s always advisable to do your research when choosing a PI provider. Using a broker with expertise in PI will help you find a reputable insurance provider, giving you confidence that claims will be dealt with efficiently and paid out if necessary.

• Does the provider offer the cover you need?

PI insurance covers can vary between civil, legal or negligence which makes a difference when it comes to paying out the claim. Policy limits can refer to the amount payable for a single claim or it could be an aggregate amount. Aggregate means that the total amount of financial cover provided is limited to the amount specified in the policy schedule, arising within the specified period of insurance. Some insurers would apply specific exclusions in the wording or as endorsements which are not easily spotted. Using a broker would help assure your policy is right for your business and adequately covers your business activities.

Need expert advice?

Get in touch with our insurance experts. Contact Beth Keeling at Beth.Keeling@marshcommercial.co.uk.