subject: The Effects Of Pi Insurance [print this page] It is important to protect yourself as a contractor, by taking out good PI Insurance. Also known as Professional Indemnity Insurance, the policy is considered essential to contractors and is very affordable for the cover it provides. If a client is dissatisfied and makes a claim against a contractor, it has the possibility to financially cost them dearly. If during a contract, a contractor accidentally breached duty of care, unintentionally infringed someone else's copyright, was dishonest or lost important data or documents, a dispute with the client can arise. PI Insurance will cover the cost of damages and for fixing mistakes, as well as covering the cost of legal fees. It is one of the most important insurance policies to have in place as a contractor.
Technically speaking, PI Insurance will protect a contractor against the cost of defending claims where it is alleged that a client has suffered financial loss as a result of error, omission or negligence. Basically, the cover acts as a safety net, covering the costs and troubles of a potential claim made against the policy holder as a result of any mistakes made within the workplace. This is an essential policy for contractors as contracting can be regarded as a high risk occupation, leading to increasing possibilities for professional error. As well as providing obvious protection, PI Insurance is commonly a contractual requirement on most contracts, therefore an essential policy to be purchased. PI insurance basically protects a contractor's professional indemnity, giving a freelancer not only great and vital protection, but also that well needed peace of mind in such a stressful and sometimes pressurising line of work.
As well as obviously protecting a contractor's professional indemnity, PI insurance also looks positive in the eyes of the HMRC regarding contracts and IR35 status. This is a huge benefit that the insurance delivers as IR35 can be devastating to contractors who fall under the legislation. PI insurance in this case acts as a means to bolster a contractor's position as a limited company, therefore aiding their viewpoint from the HMRC.
PI Insurance is a form of contractor cover that should never be overlooked. No matter what professional field a contractor is in, claims of negligence can be made against them, therefore the need for a PI policy is adamant. Insurance is important is all forms of business, and for high risk professions such as contracting, a policy such as PI insurance is necessary in order to provide complete peace of mind.
Contractors receive high earnings for their specialist lines of work, but their self-employed status leaves them potentially vulnerable to claims and assertions. These possible claims against a contractor can be highly costly and often devastating to professional reputation. PI insurance is a contractor's lifeline in these cases, as it covers all expenses and efforts during a claim as well as taking the burden of any troubles and costs along the way.
by: Chris Carvill
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