What does professional indemnity insurance cover?

Professional indemnity insurance can cover compensation payments and legal fees if a business is sued by their client for a mistake they’ve made in their work. The compensation payment will usually take into account the financial loss that the client has suffered.

Professional indemnity insurance can cover a broad range of potential risks. What can seem like small errors can be hugely expensive, but professional indemnity insurance can help to safeguard your business.

Professional indemnity insurance can cover you for mistakes including professional negligence, unintentional breaches of confidentiality or copyright, and loss of documents or data.

For example, you’re passing on confidential client data but you accidentally copy the wrong person into the email. Or you’re an architect designing a house but you make a mistake in the plans and the house later collapses. In both cases, you could be sued by your client. The compensation payment will usually take into account the financial loss that the client has suffered due to your mistake.

Bear in mind, however, that professional indemnity insurance does not cover you for the cost of any reputational damage that the mistakes have caused.

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