Professional Indemnity and Public Liability Insurance is an essential part of any business. PI & PL Insurance, as it's commonly known will protect you in the event that a person or organisation tries to sue you for any mistakes that you may make as part of run-in your business. We spoke to Sam Cox of Qdos Contractor to find out more about PI & PL insurance and how driving instructors can benefit and together we have created the frequently asked questions below.
Where an error or omission on your part has led to a financial loss to a third party, you may be legally liable to indemnify them. Professional Indemnity Insurance (PI) provides cover in the event that you are subject to legal action brought against you as a result of actual or alleged professional negligence. A PI will cover the cost of defending such a claim and, if a successful defence cannot be made, it will also cover the amount for which you are legally liable.
Public Liability Insurance (PL) protects you against claims from third parties for injury to person, or damage to property, caused (or alleged to have been caused) by your actions. As with PI, PL will cover the cost of defending such a claim in the first instance, and will also cover the damages you are legally required to pay the third party.
PI provides cover only in respect of professional advice and services – it does not provide cover in respect of physical damage or injury and, as such, there is no crossover this type of insurance and the cover provided by Motor Insurance.
PL has more similarities with Motor Insurance, in that both provide coverage in the case of physical damage or injury, however the two types of cover are entirely distinct. PL policies will exclude any driving activities, and claims where you are required to insure under the Road Traffic Act 1988. A Motor Insurance policy, on the other hand, will only cover claims relating to the operation of your vehicle, meaning you will not be covered for other activities you may undertake in the course of your business.
For further details, please see the claims examples below
Whilst PI claims are rare, there are various activities undertaken by driving instructors which may lead to claims of professional negligence. Claims may be brought by your students – for example, where you have incorrectly advised on test applications, or you have inadvertently shared confidential information with a third party. Alternatively, defamation claims may also be brought against you by other driving instructors, where you are accused of defamation/slander. If your services also extend to class room training, your policy would also cover claims where your actions may have le to cancellation or rearrangement of courses, for which you may be liable to pay compensation.
As mentioned above, PL insurance will cover damage or injury for which you are at fault, outside of the operation of your training vehicle itself. This may include certain acts of loading/unloading your vehicle, or traveling to or from it, which may not otherwise be covered by your Motor Insurance. For example, if you were to accidentally damage a vehicle whilst carrying equipment in a car park, your PL policy would react. As with PI, your PL policy will also provide coverage for classroom training – for example, where you inadvertently leave a slip/trip hazard, or inadvertently damage their possessions.What type of PL claims could a Driving Instructor face?
Unlike Motor Insurance, PI and PL insurances are generally not required at law, however it should also be that many bodies responsible for professional standards may insist on associated instructors carrying such policies. More generally, as a self-employed worker, it remains prudent to maintain insurances for your commercial activities – failure to do so may result in irreparable financial and/or reputational damage.
PL and PI policies typically offer cover from starting £1m. Whilst we do not make specific recommendations as to the level of cover required, most driving instructors will find £1m to be adequate. Higher levels of cover are widely available, and it is at the discretion of each individual as to whether they choose to increase. With the above noted, one consideration for anyone arranging cover is to be sure of the detail up front – where cover is provided via a group scheme, it is important to clarify the level of cover afforded to the individuals and the group as a whole.
For PI in particular, cover may be offered on an aggregate basis by some providers – this means that the limit of indemnity on your policy is the amount that it will pay in respect of claims made in that policy year. An ‘any one claim’ policy will pay the limit of indemnity in respect of each claim, regardless of how many claims are made during the policy year.
Posted by Ian
January 20, 2021