What is Professional Indemnity Insurance?
A: Professional Indemnity Insurance covers the policyholder against any claims of professional negligence. It will cover both the legal defence costs and any resultant damages if the claimant is found to be negligent.
For instance, if an IT contractor made an error that bought down his client’s systems causing a financial loss, the client could sue the contractor. This would be picked up by the PI policy.
Who needs PI insurance?
A: Any business providing advice and consultancy services should consider a PI policy.
Most IT contractors who work through agencies will be required to have the insurance contractually, as agencies are obviously keen to ensure both them and the end client are protected.
How much cover do I need?
A: Various limits of indemnity are available for PI Insurance, ranging from £50,000 to £5 million or higher, but the industry standard in the IT sector is normally £1 million.
Occasionally an agency will require £2 million, but it’s rare and won’t have a massive impact on the cost anyway.
How much does it cost?
A: Historically, contractors have paid far too much for Professional Indemnity insurance. Whilst there is always a risk, the likelihood of a claim is, in reality, quite slim and therefore premiums should reflect this.
At Qdos we have worked hard to educate insurers about the actual risks involved and have been able to negotiate extremely competitive premiums. A £1m policy for an IT contractor is just £147 per annum.
We can cover a wide range of other white collar trades for similarly low premiums.
Are there any other benefits?
A: Having Professional Indemnity Insurance is a proven way of improving your IR35 status. HMRC’s recently released ‘business entity tests’ make specific reference to the insurance and it is a key indicator to being in business on your own account.
How do I buy it?
A: You can purchase the insurance policy within a couple of minutes via our online shop. Simply visit our contractor insurance shop to get an instant PI Insurance quote. Policy documentation are emailed to you instantly, so you can forward it on to your agency straight away.