There are many different types of business insurance that people in the United Kingdom can purchase, and in some cases are required by law to purchase. Professional indemnity is a policy that while it is not mandatory for you to have, depending on the profession you are in, it may be highly advisable that you carry it.
Anyone who works in a profession that provides financial advice, or guidance, to others in exchange for pay, needs to have professional indemnity coverage. People who are in the business of advising others on their financial concerns can be sued if a client believes they were given poor advice. The person who gave the advice can then be held accountable in a court of law for any damages or losses the client claims occurred because they followed this poor financial advice. This can mount into a lot of money very quickly, and even though people in this profession are generally very careful about the advice they give a client, the clients are not always honest people who play by the rules.
The client may suffer a financial loss, and rather than accept that they have gambled on the stock market and lost some money, they decide that suing their financial advisor will be a way they can recover some of what they lost. So they blame it on the other guy.
This alone may be enough damage to ruin a person that works as a financial advisor, so often these people will pay the client off, even when they have done nothing wrong. If word gets out that an advisor is being sued it can prevent him from getting new clients, and it van cause a mass hysteria in existing clients, where they want to pull their money away from him, or if they are not doing as well as they want they may seize the opportunity to sue the advisor as well. Professional indemnity coverage means if you are sued you will have the funds you need to take the matter to court, and solve the problem, before the problem gets out of control. Your agent will be able to help you determine the amount of coverage you need.
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