Insurance Fred Heritage · 29 March 2016
Professional indemnity insurance remains a mystery to many small business owners
As many as 64 per cent of the UK’s small business owners and sole traders operate without professional indemnity insurance, according to the findings of a new study from small business insurer constructaquote.com. Building contractors, engineers and estate agents were found to be the least likely to have taken out professional indemnity insurance policies which are designed to protect businesses that offer professional advice that could result in a customer losing money. In signs that a lack of available information and understanding about the benefits of the insurance could be holding many owners of small firms back from buying it, 39 per cent of respondents to a survey conducted amongst 2, 165 UK small business owners and sole traders answered that they didnt feel theyd ever need it when asked why they didnt have coverage. Almost two out of five respondents said that they didnt fully understand what a professional indemnity policy would cover their business for. Financial considerations were an issue for 12 per cent of respondents, who claimed that limited budgets prevented them from taking out professional indemnity cover. The survey revealed the construction sector to be the worst culprit, with the largest proportion of respondents found not to have cover hailing from the sector. Engineering, property, IT and the health and fitness sector also ranked highly amongst those areas of work where professional indemnity coverage was uncommon. Commenting on the findings, constructaquote.com CEO Lyndon Wood said that for small businesses, it’s far better to have indemnity insurance and never need it, than the other way around. Those who say they don’t own it because they can’t afford it should really do a little research it’s affordable, and business owners can pay in either monthly or annual instalments. were shocked to hear just how many small business owners in the UK don’t have this insurance; it’s absurd, Wood continued. Those who say they havent invested because theyll never require it are those who are most likely to one day be in a position to use it.
ABOUT THE EXPERTFred Heritage
Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.