I was asked this question recently by a new start-up company in the technology sector. They understood that they had a need for professional indemnity insurance as any mistakes or errors in their software could have a financial implication for their client and in turn they could end up being sued.
Although a limited company with three directors, there are no other employees. All their work is in an office type environment other than the occasional client meeting and trade show.
I had to agree with them that the employers and public liability risks are minimal; however employer’s liability is a compulsory insurance in the UK, the only exception being sole traders, or limited liability companies where there is a sole director and no employees.
Although public liability is not compulsory, I advised the client that it was prudent to carry this cover and there was a strong possibility that they would be asked to carry at least £2,000,000 cover contractually by their clients or by the venues where they exhibit.
As the main risk they face is professional indemnity, my solution was to arrange a package policy that covers professional indemnity, employers’ liability and public liability. As insurers are also aware that the employers and public liability risk is negligible, they were able to provide the employers and public liability cover for less than £200 per annum whilst charging a higher premium for the professional indemnity insurance.
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