Professional indemnity insurance isn’t compulsory under the law, but the rules of some regulators and professional bodies mean it’s compulsory for some professions, including solicitors, financial advisers, accountants and architects. It’s also required by some client contracts.
Professional insurance is not a legal requirement for businesses. In fact, the only business insurance that’s required by law is employers’ liability insurance, which is a legal requirement for most businesses with staff.
However, professional indemnity insurance is mandatory for members of some professional bodies and is required by some regulators. This means it’s effectively compulsory for some professions. This includes solicitors, financial advisers, accountants, architects and some healthcare professionals.
When you’re figuring out whether professional indemnity insurance is compulsory for your business, check the guidelines from your regulator and your professional body and also check your client contracts.
Even if professional indemnity insurance isn’t compulsory for your business, you may decide that it’s an important insurance to have.
It can pay claims made against you for negligence or making a mistake in your work. This means that it’s a particularly important insurance for any business that gives advice, provides a professional service, and/or handles client data and intellectual property.
This makes it popular with businesses like IT consultants, designers and tutors.