Industry experts have warned that many consultants such as freelancers and small businesses need to be more diligent in checking the level of cover they are purchasing with their professional indemnity insurance policies to ensure they are buying a policy that coincides with their business needs.
Specialist professional liability insurance provider PolicyBee LLP’s managing partner Valerie Hockley stated that many consultants neglect to choose professional indemnity cover that coincides with the kind of work in which they are engaged. Firms will quite often not take into account the criticality of the work they are performing and how integral it could be to how successful a project will be overall, Ms Hockley added.
Small consultancies should start with a level of business liability insurance cover of at least £250,000, but should aim towards buying as much as is affordable, added the managing partner. This could protect your firm from incurring costs that could exceed the value of the contract in the case of being found liable for a mistake made in an important project, she added.
Always talk to an insurer before taking a major project on in order to allow them to work with you to set an appropriate level of cover, stated Ms Hockley. Additionally she recommended caution in regards to reducing coverage levels in the wake of a completed project, advising to not be too hasty.
While the temptation is there to bring the level of cover back down after the completion of a project in order to reduce premium payments, Ms Hockley stated that even though a contract may be completed, potential liability extends for some time afterwards. Firms that reduce their level of cover too soon will only have their current level of protection in the event of legal proceedings being brought against them in such a case, she cautioned.