Professional Indemnity Insurance is a business insurance policy that reacts in circumstances where a third party (your client) brings a negligence claim against you, alleging that an error or omission in your services has caused a financial loss.
The policy will look to cover the costs of defending your case, such as legal representation, as well as the liability found owing where necessary.
PI insurance is arranged on a 'claims-made' basis meaning that once your policy has lapsed, you will be unable to make a claim even if the incident which gave rise to the claim relates to a period during which your policy was active. It's important therefore to maintain cover until you're no longer subject to the relevant risks this policy covers. See below for more information.
Qdos provides annual policies with a range of indemnity limits (levels of cover) of £1 million, £2 million, and £5 million.
Professional indemnity insurance is not a legal requirement in the UK, however, you may need PI insurance if:
It is difficult for a negligence claim to be brought against a company that has ceased trading and has been closed, however, there are certain circumstances in which a court can order the company to be restored to the register and for a claim to be pursued against it.
This will depend on specific circumstances (for example: if you had knowledge of a claim, or potential claim, at the time the company was closed, amongst other factors) and specific advice should be sought (i.e. from a solicitor).
Professional indemnity insurance reacts in circumstances where you are alleged to have caused a financial loss due to negligence, omission, or error.
Professional indemnity insurance is often stipulated in contracts, but many contractors are unaware of why they must hold it when running a limited company.
PI insurance is in high demand on the insurance market, and because of its necessity, is prone to being miss-sold or miss represented.
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