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What are the things that a professional indemnity insurance covers?


When you are on duty and professionally at work, there might be cases when you commit errors. The errors can be caused due to some mishap, your negligence, lack of concentration, etc. When you do commit mistakes at work, you are bound to pay the price for it. In case your mistakes affect the client or any third party, they will be looking forward to file a complaint against you in order to get you sued. This is when you are in dire need of professional indemnity insurance.

This insurance will act as a perfect cover up for your mistakes and will help you recover from any financial cost or legal fee that you may have had to pay. There are certain scenarios that the professional indemnity insurance covers and some that it doesn’t. You can learn more about them on our website, https://www.simplybusiness.co.uk/insurance/professional-indemnity/ but first, let’s have a go through at some cases;

Will PI insurance cover bodily damage?

Yes, PI insurance does cover bodily damage under the condition that the damage was done by the business or an employee of the business while at work. Any such mishaps or accidents that cause the clients to suffer from any kind of property damage or financial losses, the insurance will compensate them for it. The only condition being that the error must be caused by you while you are on duty.

Will PI insurance cover consequential losses?

Consequential losses are those losses that are suffered by the customers due to the business’ guidance or suggestions causing them financial losses. Consequential losses are very sensitive in nature and hence they must be dealt accordingly. Some PI policies do include consequential losses; however, they come up with certain exclusions that the business should be mindful of before purchasing the insurance.

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Will PI insurance cover contractors?

Although contractors are not considered to be the employees of an organization, one must make sure that they are measured as one. Since PI insurance only covers up the mistakes made by the business’ employees, the contractors won’t be a part of it. However, in case the business portrays them as being part of the business, they will be considered appropriately then. However, a business needs to ensure that the insurers are accepting this as it can cause arguments in the future.

Will PI insurance cover defamation?

Before answering this, let us first understand what is defamation in the context of PI insurance. Defamation are basically false accusations made by someone that are aimed to affect someone’s reputation negatively. Although the law is strict in such cases, any attempt made to defame any person shall be held liable. However, usually PI insurances cover only those defamations that have been done unintentionally. It’s better to confirm this before you buy the policy.

Will PI insurance cover budget extension / breach of contract?

Yes, in case you were not able to deliver at your job in the right manner and the client has sued you for it, the PI insurance will compensate your client for the losses they have incurred. Whether they have gone out of budget or have not been satisfied by your service, your PI insurance will surely cover up for you.