Do electricians need professional indemnity insurance?

By Dom Walbanke on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

Generally, professional indemnity (PI) insurance covers a business from claims as a result of negligence, loss or damage.

Some professions require you to have PI insurance in place before you can join their body – such as architects, accountants and bookkeepers. For electricians, trade bodies such as NICEIC require PI insurance if the scope of work includes periodic inspection and testing within their scope of certification. But even if your business isn’t required to have cover, due to the nature of the work and the risks involved, it is highly recommended to have a policy in place.

Do electricians need professional indemnity insurance?

There are a range of scenarios businesses need PI insurance cover for – from copyright infringement to defamation – but for electricians it is the damage caused by your work that is most relevant.

Electrical faults can happen due to a mistake, and if they damage other parts of a building as a result, you could be subject to a claim. You could also be liable if you offered electrical advice which resulted in damage. Some clients may also insist you have cover in place before you carry out work at their premises.

Professional indemnity insurance will cover you for the cost of the damage to the property, legal fees, expenses, compensation and other defence costs.

As well as professional negligence, other areas PI insurance will cover include:

• Breach of confidentiality
• Copyright/IP breach
• Defamation
• Employee dishonesty
• Loss of documents
• Third-party injury

Claims from clients can be made up to six years after an incident has occurred. However, according to the Association of British Insurers (ABI), professional indemnity insurance policies will typically only cover claims during your policy period. Because of this, you can take out a run-off policy which covers for this timescale. This should also be considered if you’re retiring.

How does professional indemnity insurance compare to public liability insurance?

Public liability is to cover clients and/or other third-parties if they get injured or suffer damage on your premises. PI insurance covers injury or damage suffered from your business operations when you’re on the clients’ premises or as a result of poor advice which caused an avoidable financial cost. Likewise, potential claims arising from employees will be covered by employers’ liability insurance.

All of these insurance products can be bought together as electricians’ business insurance.

How much does professional indemnity insurance cost for electricians?

Because of the higher risk nature of your work, electricians will typically pay more than many professions. The average premium for any business is £8.30 according to MoneySuperMarket.

Several factors will dictate the policy quote, including the level of cover, location and size of the business. Businesses typically cover themselves for between £2 million and £5 million (Hiscox offers cover of up to £10 million) and some clients may even require a particular amount of cover.

The best method for getting a quote is to estimate the total value of properties you’ll be working on, check if any of your clients require a particular amount of cover and check with your trade body.

More on insurance

Public liability insurance: why you need it – Not sure if you need public liability insurance for your business? Here’s why you may need it and what event insurance is available

A guide to small business insurance – A look at what cover is out there and what key policies you should put in place

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