The Dangers of Working Without Professional Indemnity Insurance

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The following is a guest post. Enjoy!

The Dangers of Working Without Professional Indemnity Insurance

There are many things that you need to consider when starting up a new business, particularly a business that provides services to individuals and companies. No doubt your first thoughts turn to finding customers for your services, your overall business model, your cash flow situation, and many other things that relate directly to your business. However, one important item that you should also think very carefully about is professional indemnity insurance, which we will call PII.

Professional Indemnity Insurance Defined

PII gives you financial coverage should you be sued by a client. However careful you might be in your work, sometimes things go wrong. It might not even be your fault; you could, within the capacity of your profession and in all good faith, advise a client to take a specific course of action which did not work out as planned.

A Case Study

A recently reported case that illustrates this and demonstrates the dangers of working without adequate PII concerns an architect who provided services relating to a house extension. In order to reduce costs, he recommended the house owner to use a certain builder. However, there were many problems with them. The builders damaged a neighbouring property, building regulations were breached, and work was sub-standard.

As a result, the client sued the architect for around £130,000. Unfortunately, the architect did not have PII cover for the job and as a result he had to liquidate his business. Furthermore, the architect was struck off the official register of architects, which will make it very difficult for him to find work in the future.


Without PII, being sued by a client can be financially crippling. It really is never worth the risk. You can cover yourself for millions of pounds and the costs of the premiums are really not high for the amount of cover they provide.

How about you all? If you are a business owner, do you have insurance specifically for your business? Why or why not? 

Share your experiences by commenting below!

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