What does professional indemnity insurance cover?
Even though you exercise the utmost skill and care when delivering your services, there is still a risk, no matter how small, that a client could say you made a mistake, and make a claim for compensation against your contracting business. That’s why you have taken out a contractor professional indemnity insurance
But in the context of contractor
professional indemnity insurance, what exactly does ‘making a mistake’ mean? And how will your policy protect you against legal action and claims for compensation? What exactly does your contractor
professional indemnity insurance cover?
Your ‘error, omission or negligence’ Contractor professional indemnity insurance
will protect the insured – your limited company – against the cost of defending claims that your client has suffered financial loss as a result of your ‘error, omission or negligence’.
So, for example, say you are an IT contractor
and a web development
project you completed caused your client’s website to crash, resulting in your client losing sales. Your client may wish to seek financial compensation
from your limited company’s contractor
professional indemnity insurance.
professional indemnity insurance would provide indemnity
, up to your policy limit, for claims relating to all your projects, including the web development project, which may have been responsible for your client’s lost sales. The projects must have taken place after your policy start date, unless you have paid to extend your contractor
professional indemnity insurance to cover past projects.
Unintentional breach of contract and confidentiality
In addition to the ‘error, omission or negligence
’ claims a client might make, your contractor
professional indemnity insurance also provides cover for unintentional breaches of your contract and confidentiality.
This cover could activate your contractor
professional indemnity insurance if you failed to deliver contracting services according to what was specified in your contract, perhaps because of a genuine misunderstanding of your duties and obligations in the contract.
Email communications have increased the risk that you may make unintentional breaches of confidentiality by, for example, inadvertently replying to an email and copying recipients to whom your message was not intended, and revealing confidential information. Fortunately, this scenario would also be covered by your contractor professional indemnity insurance