Is Professional Indemnity Insurance Worth The Money?

Professional indemnity insurance is used by individuals that provide services to clients such as a private banker, accountants, financial planners and web site designers. This insurance is used to protect professionals if they are sued for bad advice or a mistake during the course of work.


Coverage for this insurance protects you against financial loss and legal costs that will result if you are sued by clients for services that you provided. Compensation may also be paid by your insurance company if a client is success with their lawsuit.

This means that you will not be in a position to suffer any loss to a business venture if you have the necessary coverage in place.

Often claims for professional indemnity will occur many years after service was provided to a client. 

In the event that you retire, this coverage may need to be continued. Professionals that provide a service to a client may be required by law to obtain a professional indemnity insurance policy.

Claims made for most types of professional indemnity insurance policies will need to be made during the policy’s term. 

This means that if your policy has expired or is non-renewed then coverage does not apply to you or your business. You will see this type of clause on a policy that is referred to as “claims-made basis.”

worth the money?

You can determine if coverage for this insurance is worth the money by first analyzing the costs when a potential loss occurs. Compare the costs that you will pay with payments that are required for insurance coverage.

If you do not obtain an insurance policy, then the incurred costs will be more than the cost of a policy and any fines for not having required coverage.


Searching for an insurance policy will require communicating with a broker. A broker will be able to find the type of policy you need by using their available resources. You can also contact an insurance company directly to buy a policy.

Claims on your policy can be minimized by taking appropriate actions. This will include documenting all your projects and providing terms in contracts or usage agreements with clients. Dealing with your client’s complaints can also help to reduce the possibility of professional indemnity claims.


The cost for purchasing an insurance policy is based on a percentage of your legal costs. This can be as little to 0.5 percent to 1 percent based on the size of your business. Other factors may include your type of industry and the size of the business venture.

Use the internet to find local insurance companies that can offer you professional indemnity insurance. Check with your current insurance company to see if they offer a policy that you can purchase.