Does An Electrician Need Professional Indemnity Insurance?
An electrician will need professional indemnity insurance if they provide their advice or designs as a service to their customers. It’s usually a part of a larger electrician insurance policy, including other coverages such as public liability and tools cover. Still, it can also be sold separately if required for a specific project.
If your customer feels that what they received from you was ‘professionally negligent’, then they may be able to sue you for compensation – even if you didn’t charge them a fee for it – which is where professional indemnity steps in.
Almost all electricians will hold a public liability insurance policy, but there is some confusion as to whether or not you need professional indemnity cover. The answer is that it depends on your business and what you offer to your customers. Suppose your work consists primarily of repairing existing installations or installing new electricals designed by someone else (architect, customer, etc.). In that case, you probably won’t need professional indemnity, as you’re simply following instructions provided by someone else.
However, if you recommend materials to your customers or advise them on blueprinting/designs, then you’ll almost certainly require a professional indemnity policy. It’ll cover any compensation claims that come about as a result of poor advice or design defects in the work you’ve provided/produced, and when partnered with a public liability policy, can help cover you against a majority of the claims a client might be able to make against you if something goes wrong.
You’ll also need professional indemnity if you provide training, certification, or courses as part of your business offering. It’ll cover you if somebody believes your training/teaching wasn’t adequate and may have caused them to make a mistake, so it is an absolute must-have if you’re helping to train/guide other electricians.
If you’re not 100% certain, we’d recommend talking to other electricians – either some you know locally, or perhaps on forums like those for The Institution of Engineering and Technology or Talk Electrician Forum – it’s always good to see what other, similar tradesmen are up to, and might provide some valuable insight into how other electricians are insuring themselves and how much they’re paying. Specialist brokers or agents can also help you understand what you need, specifically considering the work you do.
What is professional indemnity insurance?
Professional indemnity is designed to cover you against claims of what is most commonly termed as ‘professional negligence’. While the definition of professional negligence is fairly broad, it refers to a situation where your customer believes the service or advice they received from you wasn’t to the standard of what was agreed.
This could include instances where a customer believes you recommended a material that wasn’t fit for purpose or if you’ve designed and installed anything that isn’t completed to the agreed specifications. It’ll cover not only the cost of any compensation awarded to your customer (which could include a full refund, the cost of having the work repaired/redone and any legal expenses they’ve accrued) but also your own legal expenses, which can rack up quickly while you defend yourself in court.
Professional indemnity is usually sold as part of a more well-rounded electrician’s insurance policies, which might also include public liability, tools cover, business use vehicle insurance, and (if you hire any staff) employers’ liability cover. Professional indemnity can be sold separately, but many electricians prefer to keep all their insurance in one convenient place, streamlining the claims process as you’ll only ever need to go to one insurer to make a claim.
Which electricians need professional indemnity cover?
Any electrician who produces blueprints or designs offers their advice as a service or provides training or certification should consider professional indemnity. Even if you don’t meet those requirements, you may also find that some clients insist you hold a policy, so don’t be surprised if it’s a part of some tender/bidding processes, especially with larger clients.
You probably wouldn’t need professional indemnity if you only work on fitting/installing specifications that are provided to you by another designer or your customer, provided you follow the blueprints correctly. Suppose you made a recommendation for a more suitable material that ends up causing a fault. In that case, you might be found liable for any damages caused, not the original designer/blueprint creator. If you regularly advise your clients like this, you should consider professional indemnity cover.
Electrician professional indemnity cost
Most electricians will choose to package their professional indemnity into a policy with their public liability, usually at an additional cost of between £50-100 per year for a sole trader. The amount you pay will naturally depend on your risk profile (how likely you are to need to make a claim, the size of your business, etc.). Most electricians feel comfortable with around £1M of professional indemnity, but some also opt for limits of £100k, £250k or (if they work on more expensive projects) £2M. You’ll have to decide what you need for your own business.
Keep in mind that your cost will increase/decrease if you opt for more/less cover, but it’s never advisable to go for less cover than you’re likely to need.