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Professional indemnity
Although this is not a compulsory insurance it is often overlooked by business owners who think they have no need for it.
Essentially it covers a business against professional negligence so if you make a mistake and your customer suffers a financial loss as a consequence, it should meet any claim they may make against the business.
The reason that some business owner or self employed people do not feel that they need it, is that they have failed to understand the scope of potential financial loss that could be incurred by their customers.
A recent example that we came across was a self-employed man who offered a computer fixing service. He felt that the worst that could happen is that he accidentally destroyed a computer and would be liable for say £700 to replace it, which he felt he could afford if it ever happened.
When we prompted him that perhaps on the hard drive that he destroyed in the computer was an authors new book that had taken two years to write. Suddenly the liability is no longer £700 but potentially hundreds of thousands.
Furthermore, he was a sole trader and therefore did not have the protection of a limited company. This meant that any liability would fall on him as an individual and not on his company. Any no win no fee lawyer would be rubbing their hands in glee at that kind of claim, especially as he had recently paid off his mortgage.
