Professional Indemnity Insurance protects your business financially should a client make a claim against you for financial losses they incurred due to your professional advice or designs. If something goes wrong with what you advised – and the customer makes a claim against your business - then Professional Indemnity Insurance will cover the cost of your legal defence, compensation and other associated expenses.
Professional Indemnity Insurance Overview
Protection against professional mistakes – it protects tradespeople against claims that their professional advice, designs or technical solutions caused a customer financial loss.
Different to Public Liability Insurance – which protects against injury and property damage, while Professional Indemnity Insurance covers damaging professional advice.
Helps cover the cost of claims – depending on the policy, it can cover legal defence costs and compensation arising from professional omissions and mistakes.
Professional Indemnity Insurance can cover claims arising from mistakes, omissions or inadequate professional advice and services provided by your business that have caused a client a financial loss.
If you have Professional Indemnity Insurance in place, your policy could cover the cost of your legal defence, compensation and other associated expenses (subject to the policy terms). The exact protection the policy would offer would depend on the level of cover chosen, among other factors including terms, conditions and exclusions.
You might be wondering what kinds of mistakes or professional services could result in a claim under Professional Indemnity Insurance. For a tradesperson, scenarios might include the following:
An electrician designing an electrical system incorrectly, meaning additional work is required to bring the installation up to specification
A bathroom installation company designing a layout for a bathroom with incorrect measurements which led the client to pay for additional work to reposition plumbing
A building contractor producing building project plans for a home extension using an unsuitable material which resulted in work having to be re-done
A heating engineer specifying a brand of boiler for the customer which was the wrong choice, leading the client to have to purchase a different one.
Essentially, if a client relies on your advice or professional services and suffers a financial loss as a result, they may make a claim against your business for compensation.
It’s worth knowing that Professional Indemnity Insurance works on a claims-made basis. This means that you can receive a claim for work completed years ago, and generally the policy that is active at the time of the claim is the one that will apply subject to its terms and conditions. This is why it’s important not to let your Professional Indemnity cover lapse. If you’re changing or cancelling your policy, always check with your insurer how previous work will be covered.
Tradespeople likely to benefit from this insurance include electricians, builders, kitchen and bathroom designers, heating engineers, and anyone else with a design-and-build or advisory element to their work.
This type of insurance is often associated with sectors like architecture, accountancy and marketing, where poor advice or imperfect solutions can be a disaster for a paying client. But Professional Indemnity Insurance is just as important for many tradespeople who offer advice and professional expertise as part of their service. Essentially, if a tradesperson has an element of consultancy in their work, then they are at risk of their professional advisory services somehow causing harm.
It’s worth noting that some professions, such as electricians, require Professional Indemnity Insurance to qualify for top professional accreditations. For example, depending on the type of work they do, electricians may require a minimum of £250,000 in Professional Indemnity cover to qualify for NICEIC accreditation and for NAPIT scheme membership. We explore this, and other reasons electricians can benefit from Professional Indemnity Insurance here.
These two policies are similar – but there are some important differences and having one does not necessarily mean you wouldn’t benefit from the other.
Public Liability Insurance is a type of cover which protects you financially if somebody is injured, their property is damaged, or they lose their life as a result of your business activities. Generally, this applies to direct damage (to a person or their property) caused physically by you, your tools, your equipment or your work.
Professional Indemnity Insurance, on the other hand, is designed for claims arising from professional services such as advice, designs or specifications where the client suffers financial loss. This applies to a client putting their trust in your business, taking your professional advice and losing out financially as a result.
If a tradesperson conducts both physical work and offers professional advice, designs or consultancy, it may reduce their risk by having both Public Liability and Professional Indemnity Insurance to ensure both types of potential claims are covered.
Interested in finding out more? Take a deep-dive into the differences.
The cost of Professional Indemnity Insurance will depend on your individual business and the level of cover you need. Every trade business is different, and the risks associated with your work will vary depending on the services you provide.
Factors such as your businesses’ annual turnover, number of employees and the type of consultancy you offer will all affect your Professional Indemnity Insurance quote. As with most insurance, the greater the risk, the higher the premium.
Read up on how insurers determine the risk levels for trades.
Rhino Trade Insurance offers straightforward, affordable Professional Indemnity Insurance with limits of indemnity from £100k to £1m, helping professional tradespeople safeguard their business against the risks they face in their work.
Rhino can help guide you through choosing the cover level that’s right for your business. Then, if a client ever alleges that you’ve given them incorrect advice, you’ll be protected against legal costs, compensation payouts and other costs.
Get in touch today. We’ve got a 24/7 quote generator on our website, and a phone line open 8:30am – 5:30pm Monday – Friday on 0116 243 7904.
Protection against advice and designs supplied by your business can be as crucial as cover against property damage or injury to a member of the public. Read up on how you can protect your business from both scenarios.
Electricians who certify, design or advise on installations carry a risk that Public Liability Insurance doesn't touch: getting the advice wrong. This guide explains what Professional Indemnity Insurance covers, when electricians need it, and how it works alongside NAPIT and NICEIC accreditation.
No matter how long you've been working on the tools, things can go wrong. Having the correct protection in place should something untoward happen can have a significant impact on your business' bottom line.
Tell us your trade and get a tailored insurance quote for your business in seconds
Our team of experts are available to talk to Mon-Fri 08.30-17.30 and Sat 10.00-14.00
