Professional indemnity insurance considered non-essential by vast majority of small firms
Some 64 per cent of UK small businesses are not covered by professional indemnity insurance, according to new research by constructaquote.com with the most common reason for this that owners see no need for the protection.
Firms in the construction, engineering and property industries were the most likely to not have not taken out a policy and one in ten owners of such businesses indicated they thought the cover was too expensive.
Professional indemnity insurance protects businesses in the event that advice provided by the firm causes a customer to lose money. Having this type of insurance in place is a common requirement for bidding for government contracts.
Solicitors, accountants, financial advisers, architects, and chartered surveyors are also required to have the cover in order to join professional organisations but there is no legal obligation for them to do so.
Lyndon Wood, CEO of constructaquote.com, commented: Were shocked to hear just how many small business owners in the UK don’t have this insurance; it’s absurd. Those who say they havent invested because theyll never require professional indemnity insurance are those who are most likely to one day be in a position to use it.
ultimately, it’s better to have indemnity insurance and not need it, than the other way around. If a claim were made against someone who didnt have the insurance, it would cost them much more to cover the fees, which could prove particularly damaging for small businesses. For as little as 80 per year, it’s worth getting to settle any fears or concerns.
The market for professional indemnity insurance grew by seven per cent from 2010-2014 and insurers including Direct Line responded by offering the product for the first time in 2015.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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