FAQ's Professional Indemnity Insurance

WHAT IS PROFESSIONAL INDEMNITY INSURANCE?

Professional Indemnity Insurance protects businesses and individuals in the event of a claim arising relating to their designs, advice or expertise as part of their professional service. No matter how experienced you are mistakes can happen, and Rhino’s Professional Indemnity Insurance covers costs incurred if a customer alleges that you provided a faulty professional service that leads to them suffering a financial loss.

WHY DO I NEED PROFESSIONAL INDEMNITY INSURANCE?

Simply put, Professional Indemnity Insurance protects your business from financial loss if you’re held responsible for a client’s financial setback due to the design, advice, or expertise you’ve provided as part of your professional service. Without it, your business would be responsible for covering the costs, potentially leaving you out of pocket.

Professional Indemnity Insurance will protect your business if you are taken to court by clients who allege that you have made a mistake in relation to your professional services, advice you have given, or designs you have supplied, and this has caused the client to suffer a loss. These situations can quickly escalate into large bills, so it is important to have the correct cover in place.

If you offer professional advice, designs or any type of advisory services, it’s a good idea to protect your business with Professional Indemnity Insurance. Whether you’ve been in the trade for 20 years, or you’re just starting out, mistakes can crop up from time to time, and protecting your business sufficiently can be vital to its financial health.

Rhino’s Professional Indemnity Insurance helps cover a policyholder’s legal costs as well, in the event of a claim being made against them, plus any settlement sum borne by the insurer.

WHAT OCCUPATIONS ARE COVERED BY A PROFESSIONAL INDEMNITY INSURANCE POLICY?

If you make a living by giving advice, helping clients to make plans, or if you handle sensitive client data as part of your job, you could be vulnerable to professional negligence claims.

Here are just a few of the types of professions who would require Professional Indemnity Insurance:

Engineers
Inspectors
Plumbers
Gas Fitters

Even if you don’t advertise your advice or expertise as part of your professional services, you should still consider adding Professional Indemnity Insurance to your trade insurance portfolio.

CAN I GET SHORT-TERM PROFESSIONAL INDEMNITY INSURANCE COVER?

In short, the answer is no. Rhino’s Professional Indemnity cover protects your business for 365 days from the date that your cover starts.

Should you complete a job and then cancel your cover once the project is complete, you may not be covered should the work carried out lead to a claim being made against your business. The policy will only apply to the work you undertake if your Professional Indemnity Insurance is live.

Therefore, if you want to be protected, you need to take out long-term protection. This will make sure you’re covered for past work, and any jobs you do in the future, too.

WHAT DOES THE TERM ‘RETROACTIVE DATE’ MEAN?

‘Retroactive date’ means the date from which you are covered by a Professional Indemnity Insurance policy, so long as the work is carried out after this date.

For example, if you took out a Professional Indemnity Insurance policy in June and designed an electrical installation for a client in July of the same year, you’d be covered by your policy should the installation lead to issues in August and the client make a claim against you. If a different client brings a claim against you for work completed the previous January, you wouldn’t be covered for that despite you now having Professional Indemnity Insurance in place.

WHAT DOES A PROFESSIONAL INDEMNITY INSURANCE POLICY INSURE AGAINST?

Professional Indemnity Insurance covers a range of different instances which can affect self-employed individuals offering professional and consultancy services.

These include:

Omissions and errors in your work
Poor advice leading to financial loss
Designs for work you are undertaking that leads to financial loss

WHEN IS PROFESSIONAL INDEMNITY INSURANCE REQUIRED?

Professional Indemnity Insurance would be required should you be deemed liable for financial loss caused to your client due to poor advice, design or expertise provided by your business.

Rhino’s Professional Indemnity Insurance covers the costs, up to your chosen level of cover, should you find yourself in a position as outlined above.

Professional negligence claims and legal action against tradespeople is nothing new. If something goes wrong following a job, clients are likely to seek compensation for the damage caused or reputational loss suffered. The liability for this typically falls to the tradesperson, which is why insuring yourself against these costs is so important.

IS PROFESSIONAL INDEMNITY INSURANCE A LEGAL REQUIREMENT?

It’s not a legal requirement in the UK to have Professional Indemnity Insurance in place. However, you should know that if you do find yourself in a situation where you are subject to a complaint relating to professional negligence, you would be liable to pay compensation and cover the legal costs associated with defending your work.

Having Professional Indemnity Insurance is written as a condition into some contracts, so be sure to check each contract carefully before you sign on the dotted line. Professional Indemnity Insurance may also be a requirement for your business to be authorised by a regulatory body.

HOW DO I GET A PROFESSIONAL INDEMNITY INSURANCE POLICY?

It’s simple with Rhino. Simply head to our quote engine, enter a few details and get your quote in a minutes. Once you’re happy to proceed, you can buy your policy online in just a few clicks. You’ll be covered straightaway, or you can choose a start date within the next 30 days, and you’ll receive your policy documentation in your inbox within a few minutes.

And if you need to sort the rest of your trade insurance while you’re at it, you’re in the right hands. Adding on other useful policies is easy with Rhino.

Get your Public Liability Insurance, Employer’s Liability Insurance, Tools Insurance, Personal Accident Insurance, Legal Expenses Insurance and more direct from Rhino in a fuss-free, personalised bundle. It is important to note that Professional Indemnity Insurance must be purchased alongside Public Liability Insurance.

WHAT DOES THE POLICY EXCLUDE?

Coverage of Professional Indemnity Insurance is broad and it is rare for claims to be excluded, although it is important that cover is in place at the point at which the complaint or issue first arises, and that the work undertaken that causes the claim was undertaken after the ‘retroactive date’ of the Policy.

The retroactive date will normally be the date that Professional Indemnity Insurance was first purchased, provided that it has been held continuously since that date (even if it has been provided by different insurers).

WHO NEEDS PROFESSIONAL INDEMNITY INSURANCE?

Rhino offers Professional Indemnity Insurance at great rates to many different trades, from electricians to plumbers.

Any tradesperson that has a design element to their service or provides professional advice should consider Professional Indemnity Insurance. Sometimes holding this insurance will be made a condition of a contract by a contractor or customer, so you could be losing out on work if you don’t have it.

We have listed a few examples of instances where professional indemnity insurance would be needed below:

An electrician installed emergency lighting that did not comply with the relevant building regulations, the lighting needed to be removed and new lighting re-installed.
An electrician designed and installed a backup generator in a shop, the generator failed causing damage to frozen foods and impacting the shop’s ability to trade.
An engineer designed a heating system that was alleged to be inefficient and faulty due to a design error that required rectification. The decision was upheld in court and there were significant rectification costs.

WHAT DOES PROFESSIONAL INDEMNITY INSURANCE COVER?

Professional Indemnity Insurance will cover:

Your legal defence – costs incurred defending you in court against claims of professional negligence.
Compensation – any sum awarded to cover the cost of rectification of faulty work or any additional compensation awarded by the court.

The Policy Retroactive date (see What does the Policy exclude?) will fall in line with the date you first purchased Professional Indemnity Insurance, provided insurance has been held continuously since that date (even if it has been provided by different insurers). If it is the first time you have purchased Professional Indemnity Insurance, the retroactive date will be the same as the Policy start date.

WHAT COVER LIMITS SHOULD I CHOOSE?

The level of Professional Indemnity cover you need depends on your business. If you’re working in a trade where clients rely on your expertise and professional advice day in, day out, you’ll probably want to cover yourself for every eventuality with a higher limit.

There are other things to take into account, too, such as your annual turnover and the number of employees you have (if any). It’s worth remembering that your premium amount will be higher if you choose a higher cover limit, but you also risk leaving yourself underinsured by choosing a limit that’s too low.

You may also have a contractual requirement for a specific level of cover, or need a certain level to be authorised by a regulatory body for your trade.

Rhino offers a range of limits starting from £100K and up to £1M. Speak to a member of Rhino’s expert team to learn more about the cover limit that might be right for you.

HOW MUCH WILL IT COST?

The cost of the insurance will depend on your trade and your annual turnover, but premiums start at less than £100 for a year’s cover, and the cost can be spread monthly.

You can rest assured that Rhino provides great value insurance, which is not only affordable but also pays out when it’s needed.

Don’t keep pondering how much it will cost, as Rhino can give your business an instant online quote today!

IS IT A LEGAL REQUIREMENT?

Professional indemnity Cover is not a legal requirement.

However, the protection this insurance affords is invaluable to most businesses, as it protects you in the event of a claim arising out of professional negligence, potentially preventing your business from going bankrupt. Also, many businesses, customers or contractors will make it a condition of their contract, so you’ll be more employable once you have it.