Why Do I Need PI Insurance?

PI Insurance is the very popular and highly beneficial contractor insurance policy. It is an effective form of contractor protection and is required in almost every sector of the contracting profession.

The benefits of PI Insurance are huge, the policy providing secure cover in its area of indemnity. It is an advantageous policy for contractors, its initial purpose being to cover the policy holder against any claims of negligence made against them as a result of their error, omission or negligence.

This is hugely important to contractors, as some work within areas of business that are considered 'high risk'. Because of this, the potential to cause error may be high thus the potential to make a client incur financial loss is also high. If a contractor was to make a client incur financial loss due to their professional error, then the contractor would no doubt face liability claims of substantial amounts.

The PI policy acts as a safeguard to the scenario of a client taking out a claim of liability against the contractor, covering the policy holder financially in this case. PI Insurance is hugely effective in these cases and is highly popular to all contractors nationwide because of this.

The levels of indemnity of PI Insurance differ depending on a number of factors all calculating the price per month or calendar year of a PI policy. The price of the insurance can differ in regards to covering past work. This is where the policy reaches back and protects the policy holder for past jobs and services given out. Annual turnover is also an important factor when discerning the price of the policy overall, with the higher the earnings of a contractor, the higher the cost of the policy. The level of indemnity is also affected by how much the policy holder would like to be covered by (£1m to £5m for example). Unknown by many contractors, but occupation plays a large part when calculating PI Insurance's level of indemnity, as the risk factor of each profession must be taken into consideration (IT contractors would be different to oil and gas contractors for example). The number of people to cover within the policy is also a factor that is taken into consideration when conducting an assessment of level of indemnity for PI Insurance. This is where a limited company may have 2 or more people working for it that a contractor may wish to indemnify within the same policy.

PI Insurance is the ultimate contractor insurance in a sense, as the product is very often a contractual obligation for most UK contractors. This highlights the need for such a beneficial insurance as it proves that it is such a reputable product to companies who recognise its worth. No matter which sector of business a contractor works within, PI Insurance is hugely effective and advantageous, and is an insurance policy that cannot be overlooked.