Do electricians need professional indemnity insurance?

If you’re working as a self-employed electrician, a limited company or partnership, then you’ll be aware that you need insurance. But is professional indemnity insurance a necessity, and how much will it set you back?

What is professional indemnity insurance?

Professional indemnity is a type of insurance that protects businesses which provide professional advice to clients. This could include advice about design or materials.

If a client successfully claims the advice provided was wrong or negligent and caused them a loss, professional indemnity insurance ensures you can pay the compensation awarded by the court, and any legal fees which have been incurred.

Compensation may also be ordered to pay for the damage to be put right, so it’s very easy for claims like these to add up to thousands of pounds.

Do I need professional indemnity insurance?

You are not legally required to have professional indemnity insurance, although you should always check the terms of client contracts to see whether it’s a contractual requirement.

If you never provide professional advice, you may not need professional indemnity insurance, e.g. if you just install and repair electrical installations and follow the instructions of the client or architect.

However, if you do offer any kind of advice then it’s important to have professional indemnity insurance. You will also need it if you provide training or certification as part of your business.

If you’re in any doubt about whether you need professional indemnity insurance, you should speak to your insurance company.

If you can’t pay the compensation and legal fees after a successful claim against you, your business and assets will be at risk.

Apart from anything else, having adequate insurance also guarantees you peace of mind.

How much cover do I need?

This will depend on the nature of your business and how large it is. It will also depend on the type of work you do, and what level of cover a client may require you to have.

Standard levels of cover often start at between £500,000 and £1 million. However, you could get a higher level of cover if you take on complex, high-value projects. Again, it is worth discussing this with an insurance company. 

How much will my professional indemnity insurance cost?

This will depend on how your business is set up (whether you are a sole trader or a limited company or partnership), how many employees you have, and the sort of work that you do. You can get an accurate quote by applying online or talking to your insurer.