No matter how carefully you run your business, mistakes will happen. The problem is that some are worse than others and the ramifications of what may seem like the most innocent and trivial errors can create big problems for companies.
Something as simple as one of your employees sending a gossipy email about a difficult client to a supplier and copying in the client by accident could result in a defamation lawsuit. How? Because your company is essentially openly criticising your client’s business to another firm in the same sector, which could damage their reputation.
Including another company’s logo on a sales presentation might not seem like a big deal, but if done without permission it could be seen as an infringement of intellectual property and could again result in legal action. Then there’s basic negligence, with the action of one of your employees or a faulty product causing injury, which can happen no matter how confident you are in the quality of your work and the reliability of your staff. Another common example is the breaching of data protection laws if key client information including personal details goes missing.
You’ve worked hard to build your business, so how can you stop it being damaged – or even going under – from mistakes that are pretty much beyond your control? The answer is to take out professional indemnity (PI) insurance, which can provide a safety net if you need to pay to correct a mistake or cover legal costs.
Any company that provides a professional service, gives advice, handles client or business data, or is responsible for intellectual property should consider taking out professional indemnity cover. In fact, it could well be a condition of a contract you undertake, or of a professional body that you belong to.
However, it’s not as simple as buying a general PI policy. If you’re going to spend on insurance protection, you need to make sure you’re getting the most for your money and not putting your company at risk by covering all possible angles. That’s why you need to tailor the cover to your specific business sector needs.
If you’re in media, marketing or PR, for instance, damage limitation cover is important, as you could accidentally leak confidential information ahead of a press launch. Meanwhile, in IT a common claim is for the unintentional breach of a contract to supply software or hardware.
So it pays to take a close look at your business and work with your insurer to identify the key areas to be covered. After all, accidents can happen, and you don’t want your company to be a casualty.
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