Professional Indemnity: Do you need it? - ACT and Bikmo
Posted on in Business News , Cycles News
Here's one that often surprises people: professional indemnity insurance. It's not just for lawyers and accountants. It's essential for anyone who charges for their expertise, advice, or specialist services which can potentially result in a financial loss. Joanna Evans, Head of Bikmo for Business, explains in the next installment of a series of articles.
When Do You Need Professional Indemnity
If your cycling business includes any of these services, you should definitely consider professional indemnity insurance:
- Bike fitting services
- Coaching and training
- Maintenance classes
- Plus any specialist advice you're paid to provide
It's About Financial Loss, Not Physical Damage
The crucial thing to understand is that the claim doesn't have to involve an injury or damage. This is what makes professional indemnity different from public and products liability.
The Bike Fitting Scenario
You're running bike fitting services. A customer pays £200 for a comprehensive fit. You make your recommendations, adjust their position, and they leave happy.
Two weeks later, they return claiming your positioning advice caused discomfort and they've had to pay another fitter £300 to correct the setup. They also claim lost training time for an upcoming event.
This is a professional indemnity claim. There's no physical injury. No defective product. Just a claim that your professional advice has left them financially worse off.
Coaching and Training Services
Offering coaching services? Whether that's skills training, performance coaching, or maintenance classes, you're charging for your expertise. When someone pays for that expertise, they're entitled to expect a certain standard. If your advice or training fails to meet that standard and causes them financial loss, that's where professional indemnity comes in.
Say you're running a maintenance class and teach someone to true a wheel. They follow your instructions but damage their expensive carbon rim in the process. They could claim your instruction was inadequate or incorrect, leading to their financial loss.
Do You Actually Need It?
Most pure-play retailers with no element of bike fitting or coaching probably won’t need Professional indemnity insurance. Your Public and Products Liability insurance should cover typical risks of retail operations and workshop services.
But the moment you start charging for your expertise, not just for doing the work but for the knowledge and advice behind it, it's time to have this cover in place.
What About Workshop Services?
Common question: if you're servicing bikes, isn't that professional advice? Generally, routine workshop services fall under public and products liability. You're being paid to perform a service, and if something goes wrong that causes injury or damage, that's liability.
But if you're offering specialist consultancy, advising on component choices, recommending specific setups for racing, or providing detailed technical guidance that goes beyond the standard service? You're moving into professional indemnity territory.
If you’re unsure, a member of the Bikmo for Business team can set you straight.
The Grey Areas
There are definitely grey areas where professional indemnity and products liability can overlap. This is why it's essential to discuss your specific services with your broker. They can help you understand where your exposure lies and ensure you have the right combination of covers.
The Key Takeaway
If you charge customers for your knowledge, expertise, or advice, and that advice could potentially leave them financially worse off if it's wrong, you need professional indemnity insurance.
Protect Your Business with Bikmo + ACT: We’ve teamed up with Bikmo, to offer advice and insurance products that you can trust to protect your business. Find out more here.