Professional indemnity (PI) insurance can be found with several big-name providers such as Hiscox or Direct Line for Business but also several specialist insurers and via brokers and comparison engines.
A quick search online will highlight deals, including with companies you may never have heard of. The internet has made things more straightforward for businesses to find quotes, with at least 250,000 small and medium-sized British businesses thought to have professional indemnity insurance.
PI providers will want to know details such as:
- Your line of work
- Whether the business is a sole trader, limited company, plc, etc
- Expected turnover
- Claims history
- How long you’ve been in business
With this sort of insurance being more specialist with lesser-known providers, many businesses choose to use an insurance broker to source the best deal or to finalise a purchase over the phone instead of online.
When looking for a broker, a business should ask:
- Which insurers they usually work with and which they don’t have a relationship with.
- How much work do they do for those in your line of work.
- The fees they charge.
- If they can arrange monthly payments if that is something you are interested in.
- If working with more than one broker, ask for the names of underwriters they use. There are a smaller number of underwriters in the professional indemnity insurance market, so it’s worth checking to avoid doubling up.
Don’t forget to check the broker’s reviews on sites including Trustpilot, Reviews.co.uk and Google. As well as the average rating, take a look at some of the poorer reviews to see if any red flags are raised, plus consider the number of reviews made as a small number can mean they are less reliable.
Professional indemnity insurance quote
Professional indemnity quotes can vary wildly depending on the line of work a business does and the size of their organisation and contracts.
The cheapest quotes are for freelancers in a ‘low-risk’ role, for about £45 a year. But this can rise to hundreds or thousands for higher-risk companies with high-value contracts.
Research by NimbleFins found an independent financial advisor could pay from as little as £45 a year. This increased to £114 for a software developer, £174 for a management consultant, £300 for a commercial builder and £1,374 for an architect (although architecture rates, in particular, can be much higher).
The cost will also rise depending on the maximum cover required. And while this may be determined by a business owner’s assessment of risk, sometimes industry bodies also demand a certain amount of cover. The Financial Conduct Authority, for example, insists accountants are covered for up to €1,250,000 for a single claim and an amount equivalent to 10% of annual income, up to £30million in aggregate.
Insurance quotes can also vary with insurers depending on their own situation. They may have taken on several clients in the same industry and are less willing to add to their risk, and so offer a higher quote than usual. There is nothing that can be done in these cases, so it is worth shopping around for many quotes, possibly using a broker to do this for you or a comparison site.
Cheap professional indemnity insurance
Cheap professional indemnity insurance can be as little as £45. Still, business owners need to consider the amount of cover they need rather than just picking the cheapest option to tick a box.
If the work a business does carries the risk of a legal claim for £800,000, it’s no good having cover with a maximum claim of £50,000.
A financial advisor giving recommendations to clients with multi-million-pound portfolios in a volatile market carry the risk of losing a customer a lot more money than a graphic designer making wedding stationary on a small scale.
When considering the maximum cover you need, there are also two types of limit. ‘Anyone claim’ sets a limit on each individual claim, while ‘aggregate’ is a total limit of how much an insurer is willing to pay out over the duration of the policy.
Is professional indemnity insurance tax deductible?
Professional indemnity insurance is tax-deductible as it is considered a business expense. The Government describes it as an ‘allowable business expense’. It says you can claim insurance premiums as an expense but not fines for breaking the law.