If you provide advice or a service, as opposed to purely physical products, then the chances are that you will need professional indemnity insurance.

This will include numerous different types and categories of business such as accountants, solicitors, architects, computer consultants and surveyors. It is easy to sit back and see where the risks are associated with these types of business.

But what happens if you are a manufacturing business, creating bespoke products that you have designed yourself? Your standard commercial insurance policy will always, without fail, exclude professional indemnity.

You will be able to buy products liability insurance, which will cover any physical damage or loss caused by the product. But imagine a metalworker being asked to design and build railings for the local park. This may seem simple enough but if the design is not down correctly, and the railings start to rust or fall apart then this is not a products liability claim as not damage has been caused. You can bet though that the local authority will make a claim against you or your business to get them replaced.

This is where PI insurance kicks in. You have designed a product, and for whatever reason, this has not been done correctly. Damage has not been caused, but someone ie the local council, have suffered a financial loss because it is going to cost £x to remove and replace all of the railings.

Now, you mistake has to be genuine, ie the wrong type of materials used or the wrong type of paint etc and as a result of this you could have a genuine claim.

So, do not necessarily think that because you have products liability that you will be covered for all types of claims. You need to consider wider possibilities and the only way you can do this, is to speak to an insurance broker and get some advice as to the risks your business faces and whether or how they are insurable.

When looking for any type of business insurance, the better prepared you are, the more likely it is that you will end up with not only a better premium, but wider cover.

Basically, an insurer needs as much information as possible about you and your business so that they can decide what risks your business present and what annual premium they would be prepared to accept in return for carrying this risk for you.

Professional indemnity insurance is no different in this respect. The more knowledge the insurers have, the more potential there is for a better quote.

The goods news as far as PI insurance is concerned, is that insurers are more interested in your past business activities, so you should be able to put together the information they need from your books or management accounts. They will still require an estimate of future activity, but the past figures are something you must have. They will need to know what your turnover and fee income is, and  whether any advice or services you provide are separately for a fee or all inclusive.

Whether you work, or consult, for businesses in the US and Canada makes a big difference. Particularly if you need to have US jurisdiction cover, you need to refer to your t’s & c’s for your individual contracts.

The best thing to do, is to make a quick call to a broker, ask them what they need and whether they can email a blank proposal form. Once you have this you can work through this and get all of the required information. Then send this back to the broker and, if they are on the ball, you should have a confirmed, written quote within 24 hours.

Public liability insurance is something most people are familiar with. If I injure you, or damage your car or something you own, then I can be held liable under UK law. Even if I haven’t acted in a foolish manner, I can still be faced with a legal bill for you or your property. For example, if oil leaks out of my car, down the drive, onto the pavement and you slip, it is my fault. I wasn’t necessarily being negligent, but it is my fault. If my car was not there, you would not have slipped.  Another way of describing it is third party liability insurance.

The key thing in all of this is that there has to physical damage, illness, injury or disease.

What happens if you give me some advice, and I pay for it, and a sa result of taking your advice, I lose out financially? For example, a solicitor not doing the correct property searches on my house purchase, and I end up with an even bigger legal bill? This is where professional indemnity insurance comes into play. There has been no physical loss or damage, but I have suffered financially because of someone other persons bad, incorrect or negligent advice.

A huge number of different types of business can be liable for bad advice, if you are one of them, speak to a broker as soon as possible.