Professional service businesses often provide specialist knowledge, advice and expertise to their clients. Whether you are a solicitor, accountant, architect, financial adviser or consultant, your reputation and expertise are central to your business. But professional advice comes with professional risk; an error, missed deadline, incorrect advice, or allegation of negligence could result in a claim.
What is professional services insurance?
Professional services insurance is designed to help businesses manage the risks associated with providing specialist advice, knowledge or services to clients. Depending on the nature of the business, this could include Professional Indemnity Insurance, Public Liability, Employers’ Liability, Cyber Insurance, Business Interruption and other specialist covers. The right combination will depend on the services you provide, the clients you work with and the potential consequences if something goes wrong.
Professional Indemnity Insurance is particularly important for businesses that provide advice, designs, consultancy or other specialist services. A client could make a claim alleging that an error or omission in your professional services has caused them financial loss. For some industries, Professional Indemnity Insurance may also be a regulatory or contractual requirement.
Solicitors Professional Indemnity Insurance
Solicitors operate in a highly regulated environment and can face significant professional risks. A missed legal deadline, incorrect advice, documentation error or failure to identify an important issue could potentially result in a claim from a client. Solicitors Professional Indemnity Insurance is designed around the risks associated with providing legal services.
Accountants Professional Indemnity Insurance
Accountants deal with sensitive financial information and provide advice that can have significant financial consequences for their clients. An error in accounts, tax advice or financial calculations could potentially result in a client suffering a financial loss and making a claim against the practice. Accountants Professional Indemnity Insurance can help protect against certain claims arising from professional errors, omissions or negligence. The appropriate cover will depend on the services provided. An accountancy practice offering specialist tax advice, for example, may have different risks from a business primarily providing bookkeeping services.
Architects Professional Indemnity Insurance
Architects face professional risks that are different from many other professional businesses. Their work can involve designs, specifications, drawings and advice relating to construction projects. An error or omission could potentially lead to delays, additional costs or disputes. Architects Professional Indemnity Insurance can help protect against certain claims arising from these services, helping to provide financial protection if a client alleges that an error or omission has caused them loss.
What other insurance might a professional business need?
Professional Indemnity Insurance is important, but it is unlikely to be the only cover a professional business needs. Depending on your circumstances, you may also need to consider Public Liability Insurance, which can help protect against certain claims for injury or damage to third-party property if clients, suppliers or members of the public visit your premises. If you employ staff, Employers’ Liability Insurance is a legal requirement in the UK.
Cyber Insurance is also worth considering, particularly as professional businesses often hold valuable and sensitive client information and can be targeted by cyber attacks, with cover potentially helping with certain costs associated with data breaches, ransomware and business interruption. Business Interruption Insurance can help protect against certain financial losses and additional costs if an insured event prevents your business from operating normally.
The right combination of cover will depend on your business, the services you provide and the risks you face. It is important to discuss your business with your broker so they can help make sure your insurance is tailored to your circumstances and identify any potential gaps in cover.
What should you consider when reviewing your cover?
Your business and its risks can change over time, so your professional services insurance should be reviewed regularly to make sure it continues to reflect how your business operates.
Consider whether your services have changed, whether you are working with larger or higher-value clients, whether you have started providing new types of advice, or whether you have introduced new technology or systems that have created additional risks. Changes to your turnover, number of employees, client data, contractual or regulatory requirements can also affect your insurance needs. It is also worth considering whether your Professional Indemnity limits remain appropriate.
Professional firms should also ensure that their insurance arrangements are reviewed regularly rather than only at renewal.
Avoiding gaps in professional insurance
A policy may contain exclusions, conditions, limits and requirements that affect how cover operates. Businesses should therefore understand what their policy covers and, just as importantly, what it does not.
If you are reviewing your professional services insurance or would like to discuss your business’s specific risks, contact our specialist Commercial Team at commercial@mcclarroninsurance.com or at 01653 609151.
