IF you offer advice or professional services to businesses, you should ensure you are protected from client claims should a mistake or an error leave you vulnerable to a claim for client losses.

This kind of cover is referred to as professional indemnity insurance (PI) or errors and omissions. This should not be confused with public & products liability (PL/POL) – which protects your business against third party claims for injuries or property damage as a result of your business activities and/or products supplied.

Anyone who offers advice or services to clients – from design to tuition, marketing to accounting - needs to have professional indemnity insurance.

Some professional associations require members to have professional indemnity cover at a minimum level and you may also see it written as a condition of contact in service agreements.

Mistakes can happen and, whether or not you feel a claim is justified, you'll still need to act to protect your business and reputation.

For example if you are an engineer or quantity surveyor and your calculations are incorrect this can affect the load bearing capacity of structures with potentially disastrous consequences.

In some cases, it may not even be your mistake - but that of a sub-contractor or partner that you use that could leave you vulnerable to a claim for your client's losses.

Another example would be a surveyor for alarm installation who does not recommend protection to a given window or door which is then subsequently used as an access point for a theft.

It's also worth considering that if you are part of a project team, and the project goes wrong because of something you did, a client could potentially sue you for the entire cost of the failure – not just your part in it. Add to that potential compensation and legal costs, and losses can be substantial.

On more complex projects the contract terms and conditions can be very onerous and some of the better professional indemnity insurers will offer a proof-reading service to ensure you are not agreeing to terms which are overly harsh.

Professional indemnity insurance is the insurance which will respond to claims against you for bad or incorrect advice given in your professional capacity. With the guidance of an expert commercial broking team to put in place the right cover, it will give you the confidence that your business will remain afloat and your financial livelihood will be protected.

Your PI policy pays for a specialist solicitor to defend you, and also picks up the costs for any compensation or damages you have to pay.

That means it offers not only solid business protection, but valuable peace of mind.

The level of professional indemnity insurance you might need depends on what you do and also on what scale. There is no one size fits all. Professional indemnity insurance is as varied as the types of businesses who need it.

Someone who offers digital media advice to a handful of small local clients will likely need less cover than a surveyor working on a number of major housing projects or an IT consultant for a global online brand.

:: Colin Adams is commercial account executive with AbbeyAutoline (https://www.abbeyautoline.co.uk/business-insurance). For advice on profession indemnity cover or business insurance call 08000 66 55 44