Being a new business or sole trader is a difficult step into the sector you’re trying to break into. Not only do you need to focus on the sector and how to stand out, but also the logistics behind any stable business. Insurance is a vital part of running a smooth business to prevent any disaster escalating to a point where it harms the business.
Professional indemnity insurance is an option for contractors, freelancers and small business to ensure their business can operate during any unforeseen circumstances that could end badly.
What is it?
If you offer a professional service to a client or customer, then you can have professional indemnity insurance. It’s a vital asset to have to protect your business regardless of size and status, if your client was to raise an issue with a breach of contract, non-performance or professional negligence than your PII insurance will help protect your business.
At the heart of the insurance, it is essentially a safety net that you can use to help you battle a claim, having professional on your side to help you understand the legalities and pay any compensation if requires will help keep your business afloat.
Is It Compulsory?
A lot of people wonder if PI insurance is mandatory or not, by law it is not a requirement. However, a lot of companies that a would hire your service may not work with you unless you have PI insurance. Contractors Insurance, for example, is checked by the business to confirm your profession business intention and you’re not just working for some quick cash. The reason businesses require you to have it is so if something wrong does happen, you have the ability to pay them compensation for any loss they have acquired.
Other professions where it is essential include solicitors, financial advisors, accountants and architects.
What Does It Cover?
Even the most basic cover help pay towards legal fees and any payouts if a client was to claim and win against you. For the fact of needing to pay legal fees if you’re in the right, should be more than enough to make you get the PI insurance.
It should be one of the most important areas to cover for a business, if you didn’t have any insurance, then you would have to pay legal fees and invest a lot of time fighting the case made against you. For freelancers especially, this can stop your cash flow and hinder you making money. It would be a shame that you needed to make these payouts especially if your right in the disagreement made against you.
Although it’s not essential at any point, it’s still really important that you have it to protect your business from the beginning. The start of the business it the most important time to have PI insurance, it’s more likely that you make a mistake in the beginning as opposed to when you have experience in the future.