If you are accused of providing inadequate advice, services, or designs that cause your client to lose money, professional indemnity insurance, also known as professional liability insurance or PI insurance, covers legal costs and expenses incurred in your defence, as well as any damages or costs that may be awarded.

Example of a claim:

A client asked a graphic designer to create price tags that would fit around the stems of Christmas trees. The tags would have to endure the environment and remain attached to the tree as it grew. The tags did not withstand the test of time; the ink faded and the tags became useless to the client. Due to this carelessness, the client lost money and filed a lawsuit against the graphic designer for professional negligence. The graphic designer's professional indemnity insurance policy covered the expense of their legal fees and compensation payments to the client, which totalled over R 300,000.

As part of their individual industry body's regulatory obligations, several professions are required to acquire professional indemnity insurance. Failing to do so could result in you being liable for thousands of Rands in legal expenses and compensation payments, not to mention lost wages due to time spent defending any charge.

You are likely to need professional indemnity insurance if:

  • You provide advice or professional services to your clients (including consulting or contracting)
  • You provide designs to your clients (such as working as an architect or design engineer)
  • You want to protect against allegations of mistakes or negligence in work you have undertaken for your client
  • You work as a contractor, consultant, freelancer or self-employed professional, and your client has requested you arrange professional indemnity insurance in order to undertake a contract
  • Your industry association/regulatory body requires you to have it

Professions that might need professional indemnity insurance include (but are not limited to):

  • Marketing consultants, training consultants, and education consultants are examples of management and business consultants.
  • IT contractors, consultants, programmers, and developers are all examples of IT professionals.
  • Contractors who work in the technical and engineering fields include CAD designers, project engineers, and offshore oil and gas engineers.
  • Recruitment consultancies and recruitment agencies
  • Web designers, graphic designers, and interior designers are examples of designers.
  • Personal trainers, dancing instructors, and yoga instructors are among the fitness professionals.
  • Tutors, particularly private tutors, are teachers and tutors.

What is the cost of professional indemnity insurance?

The cost varies depending on a variety of criteria, including the quantity of coverage.

For a customised quote to suit your individual needs contact Vanessa.