Errors and omissions vs professional indemnity

Employers' liability insurance is meant to protect employers from financial losses following work-related accidents. It covers the compensation costs and legal fees that result from being sued by an employee or ex-employee for illness or injury caused by their work in your company.

As a self-employed person or small business owner, having the right insurance is everything.

Most businesses don't consider their doors open and ready for customers without a full battery of liability and premises insurance protection. And for good reason.

Insurance isn't just something you have to have according to laws or industry regulations; it's a type of legal and financial protection that every business needs, no matter how big or small.

While everyone can see the importance of insuring your physical building and its contents, it may be more difficult to see the big picture when it comes to liability insurance. Why do you need so much insurance, why so many layered policies?

That is exactly what we are here to answer today.

You can usually choose between £50,000 and £5 million of professional indemnity insurance. Your regulator, professional body or client contracts may indicate you the minimum amount you need. You should also consider the scope of your projects and the potential compensation demand if something went wrong.

Product liability insurance covers compensation claims and legal fees if someone sues you because they've been injured or their property has been damaged by one of your products.

While public liability insurance isn't compulsory, you should think about taking out public liability as part of your business insurance policy anyway, as it can protect you if someone makes a claim against you for injury or damage to property suffered because of your business.

The party that is held liable will depend on the circumstances of each individual case.

If the injury was due to negligence, the party who was negligent will be held liable.

If the injury was caused by a defective product, the "producer" of the product will be held liable. This is generally the manufacturer. In the event that the manufacturer can't be traced, has gone out of business or is located outside the EU, the importer of the product-such as the distributor or supplier-will be held liable.

A party that places its trademark on the product may also be held liable.

Product liability insurance is designed to cover legal and compensation costs that are incurred when an individual is injured, or if their property is damaged by your product.

The cost of a professional indemnity insurance policy depends on several factors. As with other types of insurance, insurers will calculate the price of your professional indemnity insurance (your premium) based on a number of things, including the type of business you run and the level of cover you select.

Yes, you can get business insurance before registering your business.

When you're buying your policy, information that your insurer will ask for include your business address, trade type and actual or projected turnover. You may also be asked about your business structure.

Your insurer won't ask about your company registration number (CRN) or other business registration details. As such, you'll be able to buy business insurance while you're in the midst of settling the paperwork you need to set up your company.

Public liability insurance covers compensation claims made against your business by a third party for injury or damage. For example if a supplier trips on a trailing cable in your shop, or if you visit a client and spill coffee on their computer.

General liability insurance isn't available in the UK.

Public liability insurance covers your interactions with third parties (by this definition, anyone who isn't your employee).

If your business causes an injury or property damage to a member of the public, public liability insurance will cover you for the resulting legal and compensation costs.

Every small business owner needs some combination of business insurance for financial and legal protection against liability in a crisis.

Yet, with limited resources, it can be tempting to look into cutting costs whenever you can. That could mean deciding to purchase only business insurance that you're legally required to have.

But that's overlooking the fact that an uninsured accident could potentially sink your business.

In an Inc. article, startup founder Leo Welder shared about his decision to skip out on a intellectual-property litigation insurance while he was in the process of purchasing general insurance policies for his business.

This proved to be a costly mistake. When his company was later embroiled in a lawsuit with a publicly traded company, he wound up paying several hundred thousand dollars in legal fees.

Looking back on his experience, his advice for fellow business owners is: "It's not just a matter of 'Can I afford this?' but a question of 'Can I afford not to have this?'"

With many different types of business insurance available, it can be difficult figuring out exactly what you need.

Here's when our guide comes into the picture. Below, we answer FAQs concerning business insurance.

Public liability insurance doesn't cover claims made by employees. It's designed to cover compensation claims made by a third party - for example a client, a customer, a supplier, or another member of the public - because they've been injured or their property's been damaged by your business.

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner (whether you're a sole trader, or are running a partnership or a limited company), the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche. The protection you'll need will depend on the risks your business faces.

Both public liability and employers' liability insurance are business covers that can pay out if your business faces a compensation claim for injury. The difference is that public liability insurance covers claims made by a third party (i.e. a member of the public like a client, customer, supplier or passerby), while employers' liability insurance covers injury claims made by an employee.

Different types of business insurance cover different risks. Public liability insurance covers compensation claims made by a member of the public, while professional indemnity insurance covers you if you're sued by a client. Employers' liability insurance covers compensation claims from employees.

Covering legal costs and expenses in your defence as well as any damages or costs that may be awarded, professional indemnity insurance comes highly recommended for those providing professional services. Many professions need to have professional indemnity insurance as part of their respective industry body's regulatory requirements and so always double check your contractual agreements.

Public liability insurance is designed to protect against legal and compensation costs for any accidents that your business is liable for, injuring or causing damage to the property of clients, suppliers, or members of the public.

Whether you can get public liability insurance with a criminal record depends on a number of things, including the details of your criminal convictions. Although some insurers won't provide insurance to anyone with a criminal record, some will provide it in certain circumstances.

Public liability insurance and professional indemnity insurance are both business insurance covers designed to cover compensation claims. However, the types of compensation claims they cover can be quite different.

Public liability insurance can cover compensation claims if you're sued by a member of the public for injury or damage, while professional indemnity insurance can cover compensation claims if you're sued by a client for a mistake that you make in your work.

Professional indemnity insurance is designed to protect you if your client suffers a financial loss as a result of your professional services. It covers the cost of your legal defence and compensation you need to pay to a client for a claim made against you.

The cost of your business insurance depends on the nature of your work, the type of insurance you need, and your cover levels. Businesses that are perceived as riskier will usually pay a higher policy price.

The retroactive date on your professional indemnity insurance is the date from which you've held uninterrupted professional indemnity insurance, or a date in the past from which your insurer has agreed to cover you.

Professional indemnity insurance covers risks in association with your professional services. It protects your business from legal and compensation costs that arise should a client make a claim against you, under circumstances such as:

• Defamation and libel
• Loss of documents or data
• Professional negligence

Employers' liability insurance is a legal requirement for most UK businesses with at least one employee. The minimum cover level required by the law is £5 million

Employer's liability insurance is designed to cover workplace injury or property damage claims made by employees. It is the only business insurance required by law for businesses with one or more employees.

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you're a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you'll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

Depending on the industry you operate in or professional bodies you're a part of, it may be a requirement to have professional indemnity insurance. Alternatively, you may decide that you need this cover if your business gives advice, offers a professional service, or handles client data or intellectual property.

There are several types of insurance that a contractor may benefit from. These policies are known as:

Professional Indemnity Insurance - in case a client sues for making a costly mistake whilst undertaking contractual duties such as the loss of data or unintentional breach of copyright.

Public Liability Insurance - in case a member of the public is injured, or property is damaged as a result of the actions of the company (or its employees).

Employers Liability Insurance - in case an employee is injured (or worse) whilst working for the company. Often mandatory for any company's that has more than one working employee.

The law requires most employers to have at least £5 million of employers' liability insurance, and the fine is a maximum of £2,500 for every day that you don't have this cover. In practice, most insurers will give you £10 million of cover as standard, so you don't usually have to choose a cover level when you're buying your employers' liability insurance.

Public liability insurance isn't compulsory by law, but many businesses decide that they need it to protect themselves from crippling compensation costs, and also to satisfy the requirements of potential clients.

As it can protect you if you're sued by a member of the public, this insurance is particularly important if you interact with customers, suppliers or passersby in the course of your work.

Insurance brokers are professionals who sell various types of insurance coverage to clients.

Auto, home, health, life, property, and other varieties of insurance all fall under this umbrella. Some insurance brokers work independently and others work for brokerage firms; some deal with individuals, and some elect to work only with businesses.

An insurance broker's job is to help inform clients of how best to handle risk management. They help make it possible for individuals and companies to obtain and provide insurance for themselves, their families, their property, and their businesses.

Within the UK, brokers are regulated on the state level.

They're often required to hold a specialized license that can only be obtained after completing education and testing requirements. The information they learn during the period prior to certification allows them to guide clients and answer their questions without trouble. Brokers seek to help clients understand their liabilities and how to manage those risks most effectively.

Having business insurance ensures that you and your business are protected should the worst happens.

These policies can help cover the costs that arise due to property damage or liability claims-without which you'd have to pay for legal claims and damages out of your own pocket. The costs can add up to a significant amount-and can be financially devastating for self-employed workers and small business owners.

There isn't a standard average price. The cost of your public liability insurance depends on a number of factors, including the type of business you run and the level of cover you select. Businesses that are perceived as riskier will usually pay a higher price for their public liability insurance.

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

As a self-employed person-whether you're running a full-time freelance gig, or hustling on the side-you'll need to think about the risks you face and whether business insurance could be a good idea.

In this article, our business insurance partner, Superscript, explains the covers you may want to consider getting.

If you've hired at least one employee, employer's liability insurance is a legal requirement for most UK businesses.

And while other types of cover aren't mandatory, you'll most likely want to consider business insurance products such as:

• Professional indemnity insurance
• Public and product liability insurance
• Business contents insurance
• Cyber insurance
• Management liability insurance