Professional indemnity insurance, also known as errors and omissions insurance, is a policy that covers the legal costs and expenses during your defense against a client. If a Client has accused you of inadequate services, designs or advice they may want to take you to court if they felt they have lost money in the situation.

Working from home can be a great experience in life but if you aren’t fully protected and a problem escalates, you can be left vulnerable with no one to turn to. People can put off getting professional indemnity insurance especially whilst starting up their business, but that’s the vital time to purchase it, being covered whilst you are new to the business world is best and will help you approach new business with confidence, your insurance company will likely offer some great advice too.

Here is a breakdown of the benefits of having PII insurance and a few other policies to consider whilst running a business from home.

The Importance of Professional Indemnity Insurance

  • Clients Require It – Depending on your trade, some clients will require that you are insured before they commit to doing business with you. Solicitors, chartered surveyors, insurance brokers, financial advisors, architects, accountants and healthcare professionals are all required to buy insurance as PI cover is compulsory by the industry regulators. Theses business find that having the insurance protect both parties and proves your professional manner in your chosen sector. Although some of these aren’t required to work from home, if you list that as you place of business and you travel it can keep you covered regardless, just make sure you mention the nature of your business whilst buying your insurance policy.
  • Cost & Time – If you don’t have PII insurance and a client decides your services weren’t acceptable, not only will it cost thousands in legal fees, but court hearings are a timely process that will take your time that could be spent working for someone else. You’ll have to focus on protecting your business over finding new clients and the amount of time you invest in defending yourself could potentially ruin your business. With PI cover the insurance company will do the majority of the work and take care of the expenses and if the service you provide was adequate than it should all blow over without much hassle.
  • Peace of Mind – The idea of not having to overthink everything and worry makes the policy worthwhile alone. Having peace of mind whilst working with clients will naturally make you more professional, confident and you’ll produce better work. The cover inspires confidence for both parties unconsciously if you don’t have PI insurance it might show and it can create doubt over your work from a client’s point of view.
  • It Protects Your Future Career – Naturally having PI insurance protects your businesses name, and financially if you were required to pay the company compensation it doesn’t come out of your pocket. It might be a case that although the service you provided was fine, it just can’t be proven, although the client might win the case your insurance company pays the compensation and leaves your business intact. Naturally, it’s something you should avoid as premium will increase from then on.

Other Insurance Home Businesses Need

PI isn’t the only cover to consider, every home business is different but the protection they need can be similar here are some other policies to take out of add to your professional indemnity insurance plan.

  • Business Property Insurance – Regular home or renter’s insurance is inadequate, and if you work out the price of replacing your work essentials, you’ll know it’s essential to be covered. A lot of regular policies might not provide a high enough limit on the contents replacement to cover everything lost or damaged. If your regular home insurers find out that you work from home it can put your policy in jeopardy and it might disregard some essentials you were claiming for.
  • General Liability Coverage – Might not be required for everyone, a policy that covers injuries to clients and employee if they are visiting your place of business/ home. If you’re a freelance writer, for example, it’s unlikely that you’ll be receiving visits to your home so this won’t be required.
  • Product Liability Insurance – If you’re selling a tangible product from home, then getting a policy to protect the products and consumers will benefit a home business. If the product proved to be dangerous or poor performance this policy will cover any damages.
  • Life, Health and Disability Insurance – Your business can slow down dramatically or even stop if your health is poor, so having health insurance on your business plan is essential for recovery and keeping the business afloat, disability insurance is similar if your mobility is affected by an injury and you can attend business related places you can be coverd. Life insurance is very important for those with a family to support, it’s likely you’ll have a family plan in place but business insurance can also include life insurance and if death is related to a work reason, it is fully covered.
  • Business Interruption Insurance – It can cover a vast number of unexpected occurrences, but essentially, it’s a policy to cover your lost revenue if your business is forced to suspend activity. It can be from floods, stock damages, fire and other disasters depending on where you live and how easily it is to continue business after problems it’s worth reviewing.
  • Car and Automobile Insurance – If you use your vehicle for work it’s worth adding it on to a business plan, the cover will be similar to regular policies but there is a chance of a better deal of a more comprehensive cover through your business.

Everyone has different reasons for working from home stretching from wanting to make something of your own with an original idea or for the simple reason of day to day convenience. Either way, your home business needs protecting, some insurance policies might not be essential but Professional Indemnity insurance is, it protects you from unexpected problems that you can’t personally avoid, the cost of the policy will always be worth avoiding the risk of the unknown so speaking to a professional will give you a better understanding and idea of price for your personal needs.