We carried out some research recently and one of the most shocking
findings was small businesses and freelance consultants delay purchasing
professional indemnity (PI) insurance for an average of six months
after setting up in business.
39 per cent of respondents didn’t purchase professional indemnity insurance until at least three months after they had been in business, with 20 per cent waiting two or more years.
The industries or professions most ‘at risk’ (because those we
surveyed delayed purchase of PI insurance for the longest time) are
design, engineering and marketing and communications. On average, 43 per
cent of businesses in these three sectors waited two or more years
before purchasing PI insurance.
By contrast, 90 per cent of accountants purchased PI insurance
straightaway, with the remaining 10 per cent purchasing cover within six
months.
It’s encouraging that more than half of respondents clearly recognise
the importance of PI insurance, evident by their arranging it
immediately. However, the fact that many waited until they’d been in
business for some time was a shock.
Businesses that delay purchasing PI insurance are placing themselves
at risk. A client could make a claim against them for negligence. PI
insurance covers damages and legal defence costs – which can have a devastating impact if you lose your case and don’t have any cover.
It’s clear that there’s a stark difference between sectors, with
those in more regulated fields such as accountancy and consultancy
likely to purchase PI insurance from the outset. In contrast, the more
creative sectors such as marketing and design, delay, which places them
at higher risk in the event of a serious dispute.
- We’d like to hear your views on PI insurance and other forms of cover, so please let us know about your experiences.
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