What is Professional Indemnity cover?

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Martin Baxter
22nd Jun 2020 @ 07:46 am

Professional Indemnity cover is usually required by recruiters and clients before taking on a contractor. It's also included as standard in Kingsbridge's Contractor Insurance package. But what is it and why do you need it?

How does Professional Indemnity cover protect me?

Let's say you're an IT contractor installing a brand-new IT system for a major pensions provider. You go in, do your job and move on to the next client but it turns out you made a mistake which results in crucial member data being lost and causing problems with pension pay outs. This costs your client both time, money and also results in them being reported to the Pensions Ombudsman and the Pensions Regulator.


Once investigations reveal that it was your mistake that caused the issue, you could be held liable and a claim made against you by your client to compensate them for their losses and damaged reputation.


Now, if you didn't have Professional Indemnity cover, you would somehow need to find the funds to cover this. For most people this would mean draining savings, selling off assets or even declaring bankruptcy. However, if you do have Professional Indemnity cover, then your insurance will cover the costs and protect you. Crisis averted.


Do I really need Professional Indemnity cover?

The short answer is: yes.


The longer answer is that while you may be very careful and you may be meticulous in your approach, you're only human and we all make mistakes from time to time. Now, you may never, ever make a mistake in your professional life, but would you really want to bet everything on that?  Ultimately, it's better to have the cover and perhaps never use it, than not have it and discover you need it.


It's for this reason that most clients and recruiters will put it as a stipulation in your contract, and that you could be found in breach of contract without it.


What does Professional Indemnity cover get me?

Different insurers will offer different levels of cover and some will be better value than others. Many will offer something like £1million cover in the aggregate. This means that over the period you're covered for, you can make up to £1million worth of claims. For example, if you make a claim worth £500,000, then another for £350,000, followed by one for £250,000, you would only be able to claim £150,000 of that final amount – leaving you to find £100,000 of your own money to fund the rest of the claim.


At Kingsbridge, we're proud to include £1million of professional indemnity cover any for one claim, unlimited in the aggregate. This means we will pay out up to a maximum of £1million for a single claim, but you can make unlimited claims during the period of your cover.


If you want to talk to us in more detail about Professional Indemnity cover, call our friendly team of experts on 01242 808 740 or, if you're ready, you can always visit our website to get a quote online.

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