Indemnity Insurance for Ltd co -Advice

Gregor43

I have set up a limited company to take a Business Analayst contract with a recruitment agency.

Could anyone advise me on whether I should purchase professional indemnity insurance?

My contract states that I'm responsible for keeping my company indemnified against any claims. I thought the idea of a limited company is that only the company's assets are at risk, but the company won't really have any assets!
Thanks.

EKRIUQ

I've always really wondered how good my Professional Indemnity insurance would be if I had a claim considering it costs me thousands every year, But its a neccesity in my work.

Even though you’re a limited company that only protects you against your personal assets where as P.I. insurance would protect your judgement and any claims against it. Most businesses would require that you have it so they have some come back if anything goes wrong.

There are heavy penalties and prosecutions EVEN JAIL against directors of companies who run their business’s into the ground which a claim would do to your business with no assets.

Gregor43

Ok so insurance could protect the company against fines above and beyond the value of its assests. That sounds like a good reason for me to get indemnity insurance cover. Although if it costs me thousands it's out of the question.

But surely no insurance can provide protection against jail?

Sonnenblumen

If you don't break the laws you won't go to jail. If you trade reckelessly or provide bum advice you will get fined and/or sent to jail (and deservedly so).

On the otherhand if a Third party suffers injury on your registered adddress etc you will need insurance. (Public Liability) and if an employee should suffer you will need insurance (Employer Liability).

The cowboy is the one without the five pointed star! Get the drift?

If you cannot afford insurance you shouldn't be a limited company and probably shouldn't be in business!

If you are a gambler, you could risak the shirt on your back, but if you get it wrong you will lose everything.

PS Here's a tip - Familiarise yourself with the responsiblities of being a Director of a Limited Co.

EKRIUQ

Gregor43 wrote:

Although if it costs me thousands it's out of the question.

You should get a quote for insurance, theirs a big difference between a plastic surgeon and a business adviser. But both should have P.I. insurance.

Sonnenblumen wrote:

PS Here's a tip - Familiarise yourself with the responsiblities of being a Director of a Limited Co.

Good idea, there a lot more to a company than just limited liability.

kluivert

This rings bells with the sound of auditor liability.

P11 is a must in auditing. Auditing is about giving an opinion on the truth and fairness of the financial statements, before that opinion is express, the auditor must conduct audit tests and gather audit evidence to ensure that the opinion that he/she gives is a correct one.

Anaylsiing businesses is also very opinionated. You will never get two business lecturers to agree on the same management techniques, if you catch my drift.

So long as the advice you prove is sound and factual and you conduct the assignment as to the agreed terms of the contract set out with the client and the client agrees to these terms, then they shoudl be happy with your report.

Most reports are addressed to particular people and should not be used by third parties. If it important to make this clear in the actual report.

ifah

I take it you will be a business analyst working on contract within the IT department of a medium to large company - you will be required to interpret the business specifications to develop functional specifications for the programmers/designers to determine how best to design a computer system.

In this case there is no point taking out pi or public liability insurance (unless you're a nutcase and kill everyone you work with!) as you will never have control over the end product and will never be in a position to kill off mission critical systems without the explicit ok of some one in charge - in which case you would not be liable.

This is a standard clause in all contracts you sign with recruitment agencies in the IT contracting business but i have never yet met an IT contractor who has this cover for the reasons outlined above. I'm an IT contractor working in IT 10 years now and don't have it. iirc There was a case some years back where an agency was taken to the cleaners by a company because of the actions of one of it's contractors. Companies don't require is in general unless you will be working on something very critical and sensitive.

my advise - forget about it - don't mention it to the agency or they will plague you for it.

As for the other posters I fully understand where you are coming from but there is a huge difference between a systems analyst and say a structural engineer !

Gregor43

Thanks for all of the sound advice.

Given that there are no employees etc. and the systems analyst role is pretty limited in the damage it could do, I'll do without the indemnity insurance for the moment. Thanks ifah.