That’s a very good question. And one that can have several different answers, but for the main, it is the act of being in business and the legal aspects that govern how everything operates and how the business behaves to others. Professional indemnity insurance is not always thought of as critical but it can make all the difference in certain circumstances. To protect that business one can now obtain insurance against a variety of heads of claim against your business up to a value of £10M. Take for example, a subcontractor seriously lets you down. There could well be several claims for the bad service or late delivery/completion/incomplete or incorrectly supplied goods and some major insurance groups will offer cover for these circumstances as standard. Interestingly, some companies also offer cover for odd ball claims arising from your previous work.
Everyone running their own business, be that supply of goods, services, or a bit of both, will have confidence in their own abilities and the quality of the work offered. However, in the real world, a professional company, however large or small, can face challenges to the reputation of your services and works. These could be as far fetched as suggestions of breach of copyright to accusations of defamation, these kinds of claims will be very costly and disruptive – however unfair they may turn out to be. Anyone providing a professional service will be a sole trader, freelancer or contractor thereof. Or larger limited companies and limited liability partnerships LLPs or maybe someone who provides expertise, skills or advice to clients.
Why do we need this sort of cover is the urgent cry . . . well, in the case of a negligence claim, this could easily mean you were careless in the performance, perhaps offering poor or bad advice or in fact making a mistake and the customer suffering for that. There is also the worry of infringement of intellectual property rights – this can be very big now and is absolutely happening all the time. This covers the use contents of someone else’s website without permission. Defamation is another heading bandied about a lot now. This is where someone makes false and damaging claims about the customer as a person or organisation. There are many more examples.