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This loss or damage inflicted upon your clients could lead to huge claims being made against your business (especially in this “where there’s blame there’s a claim” culture) and thus you need to ensure that you are protected should the unfortunate scenario discussed above arise. It is not callous to consider getting PI insurance, it is a necessity for any business whether you are just starting up or already have a very healthy turnover.
P.I. insurance can help protect your finances and the hard-won reputation of your business as well; it will generally pay out for defence costs and, if it is decided that a payment needs to be made to a claimant, then some policies will also cover this as well. Clearly what is actually covered and what isn’t will vary widely from policy to policy and thus you need to check the specifics with your chosen company and go over all the fine print of your policy before you sign anything- this isn’t just money which is at stake, it’s the entire reputation and future of your business. Most PI insurance will cover you and your business for: a negligent act by a member of staff whilst on duty, infringement (accidental or otherwise) of intellectual property rights – so essentially if you breach someone’s copyright, loss of data or documents, libel or slander, breach of confidentiality or director or employee dishonesty. Clearly, these are very broad categories and the actual details will vary from policy to policy and from company to company.
The size of your business will likely determine the size of the provider which you choose for your PI insurance. All companies will put a limit on the amount of cover which they offer, some will put it at around 1-2 million, whereas some will put it much higher than this. Clearly, if you are a huge, multi-national company then you are likely to get sued for much more money than if you are a small locally-run firm. Don’t overreach, getting PI insurance is vital but, be realistic, don’t pay out for a scheme or policy which isn’t going to be worth it- only cover yourself as much as you need to. This is a particularly pertinent point given the current economic climate, you don’t need to be paying out money which you really don’t need to be paying out. Get a level of PI cover which is sensible and worthy and then you really should be sorted.
With some policies, although not all, you will find that there are lots of different points which can also be covered. The cancelation of contracts or the hiring of freelancers is also covered in some policies but, if you are wanting specific details such as this then you should enter into a discussion with your chosen insurance provider- they may well be able to cut you a deal.
When choosing an insurance provider, of course it is wise to go with the one who has the lowest price but, if your company already has a relationship with a particular insurance provider then it may well be worth keeping that relationship going. Getting in with one company can only be a good thing and can lead to reduced rates and special offers in the future- this is a great way of saving your business money in the long term.
Nobody really wants to consider making a large outgoing payment every year for some insurance which may well never get used; those who don’t get PI insurance , however, find that they tend to regret it later when they are crippled by a damages claim against them. Even the safest, most reputable company cannot avoid getting embroiled in some form of dispute at some time and PI insurance provides a safety net which means that your company will not simply be left to fall. It will be supported and helped through any action against it and will have legal costs paid as well- this means your business can get on with its most important task, running efficiently and making money. Make PI insurance a priority and not just an afterthought for later in the year!