Understanding professional indemnity insurance

As a hard-working small business owner, the last thing you want to do is translate out-of-touch insurance speak and confusing terminology to find the right cover.  

That’s why at AXA, we’ve made it our mission to make business insurance straightforward, not stressful. With our guide to professional indemnity insurance, we’ve ditched the jargon in favour of the need-to-knows and answered the most commonly-asked questions.

Cut through the smoke and mirrors of business insurance and make sense of professional indemnity insurance with our guide so you can get back to what you do best: working hard for your customers.

What is professional indemnity insurance?

- It covers the costs of a claim if you give a customer inadequate service, advice or designs.

Professional indemnity insurance protects your business if you’re found to have provided poor services, bad advice or dodgy design, which resulted in customers or others losing money.

If something goes wrong for a customer following your advice, professional indemnity insurance could help cover the costs of the legal fees, expenses, compensation and other costs incurred in your defence.

Who is professional indemnity insurance for?

- Anyone who provides advice or a service to customers.

Professional indemnity insurance is useful for businesses and self-employed people who provide advice or a professional service to customers.  This normally includes professions like:

• Designers including web designers, graphic designers and interior designers
• IT professionals including IT contractors, consultants, programmers and developers
• Management and business consultants including marketing, training and education consultants
• Technical engineers including CAD designers, project engineers and building services engineers

So, whether you’re a contractor, freelancer, self-employed professional or run a limited company, professional indemnity insurance could help bolster your sense of security in your work.

Why does my business need professional indemnity insurance?

- To protect yourself when mistakes happen and to open yourself up to more business (certain customers require professional indemnity insurance).

No matter how skilled you are, no one’s perfect. Every business can be subject to a claim if your advice or services fail to meet a customer’s expectations. And with three quarters of business owners saying they’re concerned about making mistakes¹, it’s clear that getting things wrong is a big worry for business owners.

So, whether your business is accused of inappropriately handling sensitive client information or is facing allegations of a copyright breach, professional indemnity insurance could help provide the additional peace of mind that many business owners are searching for.

Not only that, but a professional indemnity policy could potentially help you win new business too – especially as some customers will only do business with you if you have the proper insurance in place.

Is professional indemnity insurance a legal requirement?

- It’s not a legal requirement for every business, but certain professions and regulatory bodies require you to have it.

It’s a good idea to check with your regulatory or professional body to see if they require your business to hold a professional indemnity policy. If you’re an accountant, chartered surveyor, architect, surveyor, financial advisor or healthcare professional, it’s likely that this’ll be the case. (Please note, AXA might not cover all of these professions)

When would I need professional indemnity insurance?

- If someone made a claim against your business it would cover the legal fees and compensation costs.  

With professional indemnity insurance, your business could be protected if the following worst-case scenarios become a reality:

• Defamation:if you’re accused of libel or slander because of something you’ve said or written.
• Breach of copyright: if you unintentionally use someone’s intellectual property without permission.
• Loss of documents:if your own documents or documents in your care are lost or damaged.
• Dishonesty of employees:if a civil liability claim is made against your business because of fraud or dishonesty by someone working for you.

Each of these claims can prove costly and disruptive if your business is found responsible - professional indemnity could help to ease the burden.

How much professional indemnity insurance cover should I consider for my business?

- It depends on the type and size of your business you run. 

The level of cover your business needs depends on the risks you face each day. With professional indemnity insurance from AXA, you can tailor your insurance to exactly what you need – up to £5 million – to insure your business against compensation payments and legal costs.

How do I make a professional indemnity insurance claim?

- It depends on your insurance provider, but it’s usually either by phone, email or online.

Professional indemnity insurance covers you for claims you become aware of during the period of the policy. However with AXA, you’ll also get the option to purchase cover for work your business carried out before your insurance with AXA started. And if you’re retiring or shutting up shop for the final time, AXA can also cover the work you carried out before your business stopped trading. Plus, we know mistakes can happen at any time. That’s why there’s no limit to the number of claims you can make with AXA Professional Indemnity insurance.

If you want to make a professional indemnity claim and your insurance is with AXA, call 0345 600 2715 or email prof.indclaims@axa-insurance.co.uk.  

How much does professional indemnity insurance cost?

- It depends on the level of cover you need which is based on the type and size of your business.

Professional indemnity insurance with AXA starts from just £52 a year* – a small price to pay for the protection you need and the peace of mind you want.

Where do I get professional indemnity insurance?

- Most of the major business insurance providers offer professional indemnity, including AXA.

With AXA, getting the professional indemnity insurance your business needs couldn’t be easier.   

You can get a quote online and build your own tailor-made policy to meet your needs. Or if you’d prefer, you can give us a call on 0330 159 1520 and get a quote from one of our experienced advisors who’ll give you the price that’s right for your business.

You’re great at running your business and you always strive to provide the best service possible for your clients. We get it. But ask yourself: could your business afford the compensation costs and other expenses if it was sued by a client who experienced financial loss following your advice? If the answer is no, then professional indemnity insurance could be for you.

*10% of our customers paid this or less between April and June 2024.

¹ The survey of 300 small business owners was carried out for AXA Business Insurance in April 2015.