The very fact of you reading this article suggests that you are at one of two stages in your entrepreneurial journey: the business is still in its infancy but starting to become something of a serious player, or it is growing apace and the more it scales the greater the responsibility it has to its people, clients, suppliers and other stakeholders.  

In both instances, it is your responsibility to ensure that the business is protected.  

Who is it for? 

That is precisely what professional indemnity insurance is: it is a protection against lawsuits or claims filed against your company by individuals or third parties who allege damage, harm, or loss as a direct consequence of services or advice you provided.  

There have been a number of high-profile cases of businesses being taken to account in recent months. One major retailer is currently facing a landmark lawsuit by its overseas garment workers who accuse the retailer of employee exploitation. Another example currently in the High Court is of a negligence claim to the value of £10 million against a hospital. 

You would be forgiven for thinking that negligence claims are the reserve of large-scale, well-known brands and businesses. But you would be incorrect. Independent sole traders, contractors and freelancers are also susceptible. Indeed, one insurance broker has revealed that in 2021 more than 40 per cent of claims it received were against companies over their handling (or mishandling, as alleged) of the COVID-19 crisis. 

Any business, of any size and located anywhere in the UK can find itself in the unwitting position of facing a claim for negligence against it, and so the need for protection is paramount. Also, as you scale your business, the risk of such a claim is increased. 

What is ‘negligent’? 

Essentially, in a business context, negligence refers to an act that results in a negative outcome for a claimant. For example, defamation is when one makes false or damaging statements about an individual or business.  

Re-using or plagiarising content, products or services is an infringement of intellectual property rights and therefore classed as negligence. There is also negligence caused by a breach of confidentiality – the sharing of commercially sensitive information for selfish gain and without permission.  

Can you afford it? 

Financial constrains often prevail within small businesses. The focus is typically on retaining as much cash in the till as possible whilst using what you can to reinvest into developing your products and services to drive further growth. But without the right form of protection the business remains at risk. 

Suppose you are a small-scale food manufacturer that has only recently transitioned the business from operating out of your home kitchen and into a fully functional premises with room to expand. The business is clearly growing, but what would happen if a customer suffered a health complication after consuming one of your products? You could be facing a claim amounting to tens of thousands of pounds – could the business you have worked so hard to build and grow absorb such an unplanned additional cost? 

Having a professional indemnity insurance policy in place provides assurance that the business is protected and can mitigate the risk of suffering any major losses. It also creates a sense of security for customers and employees too – they are people like the rest of us and one of the key elements we all seek in our business and personal relationships is that of security and peace of mind. This is precisely what professional indemnity insurance provides for them, and for you.  

If you need support with selecting or deciphering your professional indemnity insurance, reach out to our team of experts today. 

Our goal at RHL Solicitors is to help make your life easier when it comes to legal support, while providing you with an exceptionally high standard of care. 

We don’t just try to reach a settlement for you; we help to resolve legal disputes and achieve the very best outcome by tailoring our advice to your own individual needs. 

If you seek the advice and service of specialist legal experts with decades of experience, contact our team who will be more than happy to discuss your matter further. 

RHL Solicitors will have no delays or waiting times in advising you on your situation and will be quick to get you the support and care you deserve.