One form of insurance that all professional people who provide a service to members of the public need is professional indemnity insurance (PII). For some professions PII is obligatory by law – for instance anyone who provides financial advice, and it is a requirement of many professional groups and organisations such as the Law Society.

Even when this is not the case, failing to ensure that you have adequate PPI cover is potentially very dangerous.

However careful and conscientious you may be in your profession there are always times when things do not work out as planned; every now and again you are likely to make a mistake that can in some way damage your client financially, physically or emotionally. It might be just a small error, or something quite major, but it could have serious consequences.

Should a client decide to sue you then you could be placed in significant financial jeopardy. Defending your case in court is likely to be very expensive. If you were to be found liable, then you would have to pay compensation and probably the costs of the other side. Altogether you could be looking at huge costs that you would find difficult or impossible to meet. In such circumstances you might lose any equity that you have in your home; and if you are unable to raise a loan against the equity you could lose your home altogether.

Should you decide to become bankrupt, you still would not be able to write off the debts; these would remain with you until you settled them. Also you would have to consider the effect of bankruptcy on your business; it would probably be the end of it.

Failing to take out PII is dangerous and poor business sense. It is relatively inexpensive to protect yourself, and typical levels of cover are £5 million to £10 million.


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