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Chris will be answering questions from freelancers relating to business insurances and will be throwing some light on the sometimes confusing world of PI, PL, EL etc with a series of articles.
We start with Chris taking a look at Professional Indemnity Insurance, which has been the bedrock of his firm since 1995. A client will often require contractors to have this and it brings reassurance to all parties that they are operating in a professional, business environment.
Chris writes:
A robust PII policy will help protect you and your business if claims are brought against you by a client or customer due to an issue with work you have carried out for them.
Carrying insurance is also a factor in helping you prove that you are in business for your own account and increasingly it’s mandatory as part of client’s contract conditions.
PII will cover legal costs and any compensation paid as well as any associated costs incurred to rectify problems.
On the basis that these costs can be significant and could quite easily put you out of business; it makes good sense to acquire PII.
Claims
Some business owners and freelance professionals believe that their work (and the advice they give) is of high quality and that a claim would never arise….you should think again.
In so many cases claims are often brought against those in business where there is no merit, often where there’s been a simple disagreement. Legal costs can still take hold in such instances.
You should consider buying a PII policy if you give advice and where your advice or work could be challenged. Those handling documents or data that belongs to clients and customers are also vulnerable to potential claims.
Those who are responsible for a client’s intellectual property are at risk of claims also.
Policies
Good quality PII policies will cover areas such as negligence, loss of data and defamation. Not all policies are the same.
Some of the danger areas your business could be exposed to are:
- Intellectual property: unintentionally infringing on others' copyrights, trademarks, broadcasting rights, any act of passing off
- Loss of documents/data: damaged, lost or stolen data and documents belonging to your clients
- Dishonesty: liability arising from the theft of your clients' money
- Negligence: or breach of duty of care.
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Professional Indemnity from Caunce O'Hara works in a number of ways:
1. It will cover you if you make a mistake in the professional services you have provided that leads to a dispute with a client.
2. The Indemnity insurance policy will also cover the cost of fixing any mistake on your part, thus avoiding a larger claim being made.
3. You are also protected if you lose or damage any clients' documents in your care or if one of your employees are involved in the theft of a clients' money.
Ask An Expert
If you have any specific questions relating to PI or other forms of business insurance, please post in our Ask An Expert section
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Susie Hughes © Shout99 2013
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