- In this video, I'm gonna cover
and explain the two key business insurances
that most business owners, freelancers,
and entrepreneurs may need.
They are namely professional indemnity insurance
and public and employer's liability insurance.
What exactly are they?
How do they work?
And do you actually need them?
Stay tuned to find out.
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Unfortunately, there's still a little bit
of skepticism around insurance in general,
in particular business insurances.
I mean, you as a business owner,
freelancer, entrepreneur, are probably wondering,
"Do I actually need these insurances?"
And if you do pay for these insurances,
are they fit for purpose if ever called upon?
And that's what I'm gonna go through in this video
with you today.
First of all, a little definition
of what insurance actually is.
If you think about insurance,
you probably have some sort of household insurance
or car insurance.
Insurance, effectively, is the transfer of risk
from one party to the other.
So you, as the insurance holder or the policy holder,
is transferring some risk from yourself to another party,
who are insuring you in return for a premium.
But, regrettably, you've probably been there,
and we've all experienced this in the past,
some insurances aren't even worth
the paper they're written on,
and when you've come to call upon them,
there's a load of exclusions,
and there's a load of policy wordings
that actually don't allow it to pay out.
And that's exactly what you want to be wary of
when it comes to buying professional indemnity insurance
and public and employer's liability insurance.
So I'm gonna break this down for you,
starting with professional indemnity insurance.
Now, in order to help us understand
professional indemnity insurance,
I'm just gonna jump on our business insurance page.
So we type in the URL here,
and we end up on our business insurance page.
I'm gonna scroll down and go straight
to professional indemnity.
Click on this button, and this brings up
a really, really good definition.
Let me read it out to you.
"Professional indemnity insurance, PII,
will protect you against the cost of defending claims
where it is alleged that a client has suffered
financial loss as a result of your error,
omission, or negligence."
Now, what exactly does that mean?
Well, let me give you an analogy.
Let's say you're in the business of giving advice,
like a financial advisor.
Now, you could be advising people on their mortgages,
pensions, or other financial products.
And, if it can be proven, and I do mean proven,
that your advice was negligent,
you made a material omission or a serious error
that has resulted in the client's financial loss,
then, actually, that client can make a claim
against you or your business for professional indemnity,
and that is when the insurance would kick in.
Financial advisors aren't the only ones
that could suffer this loss.
It could be in any business across the spectrum.
If you're a graphic designer, for example,
and you've done some lovely designs,
the content was provided to you by the client,
but you've made a material omission,
for example, and that content then went out
to the client's clients, that resulted in a loss.
Then, there could be a claim against you
for professional indemnity.
You see it's all about negligence, error,
and omission.
And if it can be proven that you acted
in one of those three ways that resulted, directly,
in a financial loss for your client,
then your client has the right to actually make a claim
against you or your business
under your professional indemnity insurance policy.
And if you don't have any insurance,
then, actually, it could become quite painful
for you and the business.
So moving on to the next type of insurance,
and that's called, "Public and employer's liability."
Now, once again, I'm gonna go on screen here,
and I'm gonna demonstrate a definition of it here.
So, if we click this button,
it pops up here, and the definition is,
"It will provide indemnity for your legal liability
for injury or death to employees or third parties
and damage to third party property
as a result of negligent acts by you or your employees."
That's quite interesting.
Let's break it down and start with public liability.
Now, just imagine a building company.
You're part of a building company,
and you're up a ladder, doing somebody's roof,
and, all of a sudden, you accidentally
drop a brick or a heavy tool,
and it hits a member of public walking below you.
Now, if that member of public gets injured,
they can make a claim against you or the building company,
whoever holds a policy, in terms of negligence
for not ensuring health and safety.
So that's a prime example of a business
that operates in this method.
Public liability insurance is not just limited
to businesses that probably need that level
of health and safety.
Let's say, for example, you're a graphic design studio,
and clients come to your offices in order to sit down,
go through things, and actually liaise with you.
And let's say there's a loose wire hanging out somewhere,
and they actually, accidentally, electrocute themselves.
Hopefully don't die, but electrocute themselves.
Now, that can be an act of negligence.
And because that client is a member of public,
then they have the recourse
to actually sue you or your company,
whoever holds a policy on the public liability.
And the circumstances and scenarios can go on and on and on.
The key here is an act of negligence.
If it can be defined an act of negligence,
and it actually happens,
then there could be recourse against you or your business
in terms of a claim.
The next is employer's liability.
Now this is very similar to public liability.
The only difference is if these are actually
employees under an employment contract,
working for you or your business.
And, therefore, the actual event,
which is an act of negligence that could lead
to an employee's injury or death is exactly the same
in all scenarios.
And, in this case, this is where
the employee's liability insurance element of it kicks in.
Now, one of the main questions
that you probably have and always gets asked is,
"Is my insurance policy fit for purpose?
Will it actually pay out in these certain events,
and what are the exclusions?"
That's a very, very good question.
So, in order for me to help you understand this,
I'm gonna jump on the business insurance page again,
and I'm going to go to the areas
where you need to look very, very carefully
in terms of the insurance policy wording, exclusions,
and other aspects before deciding to purchase
an insurance policy.
So if we go to this URL, professional indemnity insurance,
and here we go,
and here's our business insurance page
for professional indemnity insurance.
This is underwritten by a company called Qudos, by the way.
This is not our own insurance; we are affiliate of Qudos.
So if we scroll down and go to a button
called, "Additional info," it will take us
to this section here.
We're going to go to build a quote in a moment.
If we go down here to "Important Documents,"
this is what you really need to look at.
First of all, some specimen policy wording.
So let's just take a look at one
of the specimen document wordings.
Very, very well worth reading.
Now, I'm not suggesting that you go into complete depth
and read every single word and spend hours doing this,
but at least spend a few minutes,
if not 10 or 15 minutes or so,
going through it and understanding it
as best as you possibly can.
Sections that you want to look at are:
"Insuring Clauses."
And, quite important, "Exclusions."
- So this is really important.
What will it not cover in the event of a claim?
And you can see in this particular specimen document,
there are 18 different exclusions
for different various reasons.
Some are gonna be more onerous than others,
but it's definitely worth having a look at them.
Things like dishonesty here.
So make sure you understand them as best
as you possibly can.
And if you don't understand them,
it's well worth calling Qudos,
and they'll be more than happy to take you
through your questions.
If you then further scroll down to this section,
it's called, "Professional Indemnity Insurance FAQ."
Now there's some really, really good FAQs here,
and they're well worth reading,
and it gives you a better insight
about the policy and the type of insurance.
Then, if you're happy,
you can actually go and build a quote.
So go to this section here to build a quote,
and then start answering the questions.
"Which structure best describes your business?"
For example, if you're a limited company partnership
or sole trader, what do you do?
And there's a dropdown list that comes there,
so, for example, IT contractor, business management,
training consultant, and so on.
At the moment, I'm just gonna put, "IT contractor."
"How many people need cover?"
Well, if you're a sole trader
or a sole limited company trader, then only one.
If there are a number of directors who are fee earners,
then you'll need to select that many directors.
And, "What's your turnover?"
Just select the range.
"Which products would you like?"
So let's go for professional indemnity insurance.
Click on the plus sign, and there you go.
One product from 162 pounds,
or 13 pound 50 per calendar month.
So 162 pounds is the annual cost.
If you're happy with that, you can just press "Next step."
And then there are a series of questions that come up.
So, for example, "What date do you want
the policy to start?"
Some disclosures.
And whether you wanna reduce the policy excess,
but, obviously, that will mean a higher premium.
Here's some statements of truth here,
and confirmation of statements
before you go to the next step.
Now, hopefully, that gives you a really good insight
into professional indemnity insurance
and public and employer's liability insurance,
the two main business owner insurances.
Now, there's a plethora of other types of insurances
out there, as you may have discovered,
but certainly if you're a new startup or a small business,
they're the two that you need to focus on at first.
If you're an established business,
then all I can recommend is that you look
at your existing policies,
make sure you got the right level of cover,
and they are actually fit for purpose.
As always, I hope you found this video
very, very useful, insightful,
and a little bit empowering.
Now, if you did like it, please drop us a like.
That would be much appreciated.
If you have any comments or questions,
please put in the comments or boxes below.
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Until the next video, I bid you a very, very good day.
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