International Clients: Is Specialist Professional Indemnity Insurance Needed?

If you offer professional services, professional indemnity is a key insurance that can keep you safe from negligence claims. However, do you need a specific professional indemnity insurance policy if you have clients outside the UK?

Understanding professional indemnity insurance

Professional indemnity insurance is designed for all firms, industries and sectors that provide customers with services. It’s there to protect you from the cost of legal fees if you are accused of providing negligent services or bad advice that leads to damage or loss.

Assessing your insurance needs

When assessing your professional indemnity insurance, you should look at the services or advice you provide to customers and how much a potential claim might be if it has been made against you.

The amount of coverage you should opt for is up to you, but it is suggested that you go for as much as you or your business needs, to avoid the risk of exposure. Your insurance needs to cover the total cost of correcting your possible mistakes and any legal fees for the claim against you, so build the worst-case scenario into your policy.

When do you need international coverage on your professional indemnity insurance?

If your business is situated in the UK but you are providing some advice outside of the UK, you must ensure your professional indemnity insurance includes coverage for the territories you are operating in.

To do so you need to ensure the ‘territorial limits’ on your policy cover the country/region where you are providing the advice.

A simple checklist if you need to review the territorial and jurisdictional coverage on your professional indemnity insurance policy could include:

1. Are your clients based outside the UK?
2. Is any of your client’s income or declared fees coming from outside the UK?
3. Are your contracts covered by non-UK law?

If any of these 3 statements apply, you must discuss your policy with a specialist professional indemnity broker to ensure you have the correct coverage for whatever non-UK laws or territories are involved.

Once you have established this, you will also need to check if:

1. Your policy can theoretically cover for these non-UK clients
2. Your insurers will agree to provide coverage – especially if contracts are using non-UK courts, as this can make getting coverage more challenging.

Professional indemnity insurance, territorial and jurisdiction limits

Most of the time, your professional indemnity policy will cover you in the UK and the EU. However, you should always check if you are limited to certain areas and jurisdictions even if you are only in the UK.

For example, your agreement may only cover you for services or advice given within Europe. This means, if you are sued for perceived bad advice you gave to a company or individual outside of Europe, your insurance wouldn’t cover the costs.

For covering companies outside the UK and EU, you will definitely need enhanced coverage on your professional indemnity policy. Typically, there are two further levels:

1. Worldwide excluding USA & Canada coverage (UK, EU, and worldwide)
2. Worldwide coverage (UK, EU, and worldwide including the US and Canada)

Key considerations for worldwide territorial and jurisdiction limits

If you regularly work with clients that are based in the US or Canada, you need to know about the different ways that professional indemnity insurance works with clients across the pond.

Different laws 

The US and Canada have a much more litigious society than you may be used to in the UK. This means they can resort to legal action quickly and for less reason than elsewhere. This significantly raises the risk for insurers, so you may end up having to pay a higher premium.

Different costs

Legal costs in the US and Canada are more expensive than in the UK. Again, this can raise your insurance premium if you work with clients in North America.

A valuable form of cover

Professional indemnity insurance is a mandatory requirement for many regulated professions and contractors and can be extremely important and valuable to help you cover legal costs when things go wrong. For peace of mind, find a specialist professional indemnity insurance broker you can trust.

Get a professional indemnity insurance quote

Get in touch with Towergate’s specialist professional indemnity team for a quote today.

About the author

Alison Wild BCom (Hons), FMAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a Fellow member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has 20 years' experience as a residential landlord.

This is a marketing article by Towergate Insurance. Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

The information contained in this article is based on sources that we believe are reliable and should be understood as general information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such.