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HomeBusiness StrategiesSmall BusinessA must read guide to protecting your small business

A must read guide to protecting your small business

One of the strongest business trends in recent years is the rise of independent consultants and small businesses, which offer highly-specialized knowledge, skills and advice to clients and customers. Professionals in legal, medical and technological fields are finding success as independent business owners. Small businesses are, unfortunately, more vulnerable than larger corporations should a client allege negligence. Here are a few ways that independent consultants can protect their business.

Who needs professional indemnity insurance?

Any professional who offers services or professional advice can benefit from professional indemnity insurance. Professional indemnity insurance is an important cover for the self-employed, especially freelancers and contractors who give advice to clients such as

Management consultants such as marketing consultants, training consultants and business coaches

IT professionals including programmers, developers, web designers, graphic designers

Technical and engineers including CAD designers, architects, project engineers

Recruitment agencies and recruitment consultants

Interior designers and home staging consultants

Fitness professionals including personal trainers, dance teachers and yoga instructors

Teachers and tutors including private tutors

What is covered?

Professional indemnity insurance, also known as E&O (errors and omissions) is a type of business insurance that covers costs you might face if your work, service, or advice causes a client to suffer a loss.  It covers legal costs and expenses incurred in your defence. A professional indemnity insurance policy protects against the following circumstances

  • Professional negligence: If you give incorrect advice or making a mistake
  • Defamation: If you produce or support libellous statements about your client
  • Breach of confidence: If you share sensitive information without permission
  • Breach of copyright: If you infringe on copyrights, trademarks or intellectual property
  • Lost or damaged documents: If you lose or damage documents entrusted to your care
  • Employee cover: If an employee commits a malicious act that causes a loss for your client

What happens without professional indemnity insurance?

If you don’t have this protection then you could be liable for any costs relating to a claim made against you. This could include legal costs and compensation. As a small business owner, these staggering costs may prove overwhelming. Business owners are ultimately responsible for the fiscal wellbeing of their business. While the prospect of facing a lawsuit seems daunting, particularly if your business has never faced a claim situation before, it makes sense to get the right level of protection should the worst happen. This will ensure you have the appropriate legal support and the financial means to get your business back on track as quickly as possible.


Although Professional Indemnity insurance is not legally mandated, without it your business will remain at risk of financial devastation in the event of a lawsuit alleging negligence. Professional Indemnity insurance protects your company, your employees and other professional contractors against claims of inadequate work or negligent actions. Professional Indemnity Insurance does not replace liability insurance for business owners and their employees. Speak to a trusted insurance adviser about your legal risks to get the information you need to make a smart and informed decision

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