Why do I need this insurance? What does it protect me against?
Professional Indemnity Insurance
What does it cover?
This insurance protects professional people against legal liability to pay damages and costs to persons sustaining loss through a breach of professional duty.
In layman’s terms this means that someone alleges you have failed to deliver your services properly and that they have had a cost to either put this right or to pay a third party for your allegedly defective service.
Some examples
- A client is sued by their client because they have not undertaken a process correctly that you trained them to do. The client then sues you.
- You provide some advice on compliance which proves to be incorrect and the client sues you for the financial consequences of their action in handling this incorrectly.
- You undertake a review of a client’s regulatory procedures. The client subsequently has an FSA investigation who identify a breach in their rules. The client pursues you for alleged poor advice and recovery of their financial loss.
- You carry out complaints handling work for a client and fail to escalate a potentially serious matter which subsequently results in a substantial payment by the client to their customer. The client sues you for the loss they incur.
Public Liability Insurance
What does it cover?
This insurance covers your legal liability to pay compensation to third parties for bodily injury or damage to property arising from your business activities.
In layman’s terms this means that if you are found legally negligent in tort, contract or similar a third party will be awarded compensation where they have sustained either bodily injury or damage to their property.
Some examples
- Whilst doing some work at a client’s premises you scratch the Board Room table. The client asks you to pay for the table to be replaced.
- A client visits your premises and slips and falls on your stairs. They claim against you for their injuries.
- Whilst at a client’s premises you are organising a room for a meeting and inadvertently catch a client’s employee with a chair injuring their arm. They claim compensation for their arm injury and time off work.
- An employee of one of your clients trips over a power lead you have left trailing over the office floor. They have an awkward fall and break several limbs and the client sues you for the loss they incur.
Employers' Liability Insurance
What does it cover?
This insurance protects a company against its legal liability to pay damages and costs to persons employed by them who are injured or suffer loss of or damage to their property as a result of their employment.
In layman’s terms this means that if an employee alleges you have failed to protect them against suffering an injury or loss then this insurance will respond to an employee’s claim against you for injury to or loss or damage suffered by them.
This is a compulsory insurance within the UK where you have employees as detailed in the Employers’ Liability Insurance Act 1969 and its subsequent amendments.
Some examples
- An employee is injured whilst employed by you and working on a contract at a third party’s site. They can claim against you as the employer if you failed to ensure that the site where they are working is ‘safe’. They also have the option to claim against the company based at the site, and your insurers would have the option to recover losses awarded should they be found to be the one’s that are liable.
- If you can be found legally liable, this insurance will respond if an employee’s personal property is damaged while working for you.
- An employee visits your premises to collect some equipment and falls down the stairs. If you can be found legally liable this insurance will respond in terms of injuries sustained and the associated award and legal costs.
