Professional Indemnity Insurance and PR Consultants – Our Top 5 FAQ’s
As PR Consultants, you need to be mindful of claims that could be brought against you for work that you carry out on behalf of your clients. We have put together our top 5 FAQs and answers which should help make navigating the world of professional indemnity insurance that bit easier.
Do PR Consultants need Professional Indemnity Insurance?
Absolutely. Professional Indemnity Insurance can protect you in respect of claims or actions that are brought against you for a breach of your professional duty. This could be for a mistake that you have made or for advice that has caused financial loss to your client. A professional indemnity policy can cover your legal defence costs, as well as any award that may be made against you. The policy can even step in and pay for your legal defence costs if you are falsely accused of wrongdoing in the course of your work. We all know that legal fees can rack up to some seriously eye watering figures, so its important that you ensure you have the right insurance.
What type of Professional Indemnity claims could be made against a PR Consultant?
When a client comes to a PR Consultant, they do so for the specialist knowledge and advice that, that person will be able to provide. Being a professional comes with significant responsibilities which means you could be liable for any financial loss that a client may suffer as a result of a breach of that duty. There are lot of different things that could happen. For example, let’s say you were involved with a campaign for a new lady’s online fashion retailer. You came up with an amazing name that the client was happy with and the campaign was launched on that basis. Unfortunately, it subsequently came to light that the name you had suggested was in use and a breach of copywrite claim was brought against your client. The claim cost your client significant sums of money and they would then look to recover their losses from you.
How much Professional Indemnity Insurance should a PR Consultant buy?
This is always a difficult question to answer as there is no one size fits all and it largely comes down to what you are comfortable with. However, there are a few things that you should consider when deciding how much insurance to buy.
- Do you have any contractual requirements with any of your clients that require a minimum level of cover?
- Remember your liability could stretch far beyond the contract value. So, you need to consider what sort of things could happen and how much they could cost to rectify. – If you consider the example used in the question above, it is likely that the cost of the claim was well in excess of what the PR Consultant was paid for the job.
- Think about the size of your clients and the type of work that you do. If you are doing leaflet campaigns for small local businesses, then the risks are probably going to be a lot less than digital projects for large multinational companies.
If I work for an agency but do a bit of freelance work do, I need my own Professional Indemnity Insurance?
Yes, you do. Traditionally, your employer’s insurance will cover you for work that is done in the course of your employment for them. However, it will not normally extend to work that you do on a freelance basis. You therefore need to take out your own Professional Indemnity Insurance policy which can protect you in the event of a claim being made against you. It is important to remember that without insurance any personal assets that you have could be at risk in the event of a claim or action.
I have temporarily stopped working due to Covid-19, do I still need to renew my Professional Indemnity Insurance?
Yes, it is important that you do. Professional Indemnity Insurance is a little different to most other insurances in that it is offered on what is known as a ‘claims made basis’. This means that the policy will only respond to incidents or claims that you become aware of and report during the policy period. So, if you let your insurance lapse and a claim comes to light for some work you have done in the past you essentially have no cover, despite being insured at the time. It is therefore important that you ensure you maintain suitable cover.
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