Professional Indemnity Insurance

Professional indemnity insurance covers the cost of compensating clients for loss or damage resulting from negligent services or advice provided by a business or an individual.

If you offer your knowledge, skills or advice as part of your profession – either as a self-employed individual or for a company ­– you should consider taking out professional indemnity insurance.

Some professions are required to have professional indemnity insurance by their professional bodies or regulators – these include:

  • Solicitors

  • Accountants

  • Architects

  • Chartered surveyors

  • Financial advisers

  • Some healthcare professionals

  • Advertising agencies

  • Consultancies

  • Design agencies

  • Public relations agencies

Professional indemnity insurance protects you against claims for loss or damage made by clients or third parties as a result of the impact of negligent services you provided or negligent advice you offered. 

Compensation claims can be brought against you even if you provided a service or offered advice for free.Directors’ and officers’ liability insurance – also known as D&O insurance – covers the cost of compensation claims made against your business’s directors and key managers (officers) for alleged wrongful acts.

Wrongful acts include:

  • Breach of trust

  • Breach of duty

  • Neglect

  • Error

  • Misleading statements

  • Wrongful trading

If your company has directors or key managers, directors’ and officers’ liability insurance can cover the cost of compensation claims made against them by shareholders, investors, employees, regulators or third parties.

Directors and officers have specific duties, responsibilities and powers relating to their positions. These are usually set out in their job description or terms of reference. If a director or officer of your company is found to have acted outside of their terms of reference, civil, criminal or regulatory proceedings can be brought against them.

Directors’ and officers’ liability insurance covers the cost of defending these proceedings, as well as any compensation costs that arise from an unsuccessful defense.

If directors and officers do not have insurance, they face a greater risk of not being able to defend themselves against:

  • Disqualification from holding the position of director.

  • Civil proceedings which can lead to hefty legal costs and awards for damages.

  • Criminal prosecution which can lead to fines and possible imprisonment.