Professional Indemnity for sole traders

What is professional indemnity insurance?

It’s a type of insurance that protects you and your business if you are sued by a client because your recommendations, advice, or professional services caused them financial loss.

If you offer designs, specifications, advice, or instructions in your line of work – as many in the construction industry do – you should consider getting professional indemnity insurance.

Do sole traders need professional indemnity insurance?

If you offer any of the services above, you should have professional indemnity cover.

It doesn’t matter how small your business is, or whether you are working as a sole trader.

Why do I need professional indemnity insurance?

If you are successfully sued, the costs involved can be substantial.

The claim itself, and putting right any damage that has been caused, can quickly add up to hundreds of thousands of pounds.

There are also the legal costs involved, which can add thousands to the total cost.

Without professional indemnity cover, you will be responsible for paying these costs. For a limited company, the company will be required to pay. However, as a sole trader, you will be held financially responsible.

If you can’t pay, your business and other assets you own may be at risk.

Must I have cover?

While you are not legally obliged to have this type of insurance, some clients may make it a contractual requirement. Without it, you won’t be able to do business with them.

Some trade associations may also require you to have cover to be a member.

How much does it cost to have professional indemnity cover?

The cost of your premium will be calculated by considering several factors. These include:

• the size of your business
• the size of your contracts
• the type of work you do
• the amount of risk you are exposed to
• the type of clients you work with.