We all know that companies face a number of critical issues that could have a damaging impact on their business and a knock-on effect on their clients – but what might surprise you is just how many of them are ignoring professional indemnity cover as a way to cover these problems.
New research by Direct Line for Business has shone a light on the extent of the problem. It has found that almost a third of UK businesses (31%) have experienced critical business issues ranging from injuries being sustained on the company’s premises to loss of business reputation after using consultancy services – and yet 24% of service providers have no professional indemnity insurance.
For insurance brokers looking to sell PI policies to these businesses, there is perhaps one key message to get across – according to the same survey, one in five of those SMEs that DO have PI cover, actually make a claim.
“While over a quarter (28%) of SMEs claim not to need professional indemnity cover, 24% of the remaining businesses don’t have any PI cover in place, with 8% claiming not to be familiar with PI at all,” said Jane Guaschi, business manager at Direct Line for Business. “Of the companies that told us they do have cover, more than one in five (22%) have had to make a claim on it, with 10% having to claim on it on multiple occasions.
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“Small businesses should consider taking out PI insurance which includes cover for breach of confidentiality and professional duty, malicious acts or omission by former and present employees and loss of data or damage to a client’s reputation.”
It’s not just in PI that is important for businesses either – with Guaschi also explaining that public liability is also often overlooked.
“If you have customers visiting your premises or are visiting clients at their own premises, then public liability (PL) insurance will provide cover for damage by your business to their property, as well as injuries, such as if somebody tripped on a piece of loose carpet in your office and hurt themselves,” she explained.
The survey highlighted a range of common occurrences that can help brokers ram home the importance of these cover options to their clients. It found that the most common incidents were employees being injured on site (29%), having an employee steal money or information from the company or a client (21%), losing a client as a result of giving poor advice (19%) and having a client experience a financial loss because of service provided (18%).
“Even if you’re professional and always give advice and sell products in good faith, everyone has the potential to make mistakes,” continued Guaschi. “The costs of litigation and damages can be steep, so small business owners should ensure they have the relevant insurance cover to give them peace of mind and allow them to get on with growing their business”.