QUESTION 1:
I’m just starting out with my business and I’ve already got too many bills to pay. Can’t I just wait a while before thinking about indemnity insurance?

ANSWER:
Not if you want to stay on the right side of the law. Indemnity insurance is compulsory for professions like the law, accountancy and financial advice. If you get caught working in one of these fields without cover there will be big fines to pay – and you will probably struggle to stay in business afterwards. But even if you aren’t legally required to have cover then it can still make sense – not least because policy benefits can be pretty powerful. In a nutshell the plans are designed to protect your business against compensation claims from clients if you make mistakes or are negligent in your work. And if you think clients won’t make claims then think again. Lawyers know there are big fees to be made by taking action on behalf of unhappy customers so they are keen to take them on and see how far a case can go. Even if you aren’t found liable the time and money you need to spend defending yourself can make a huge dent in your profits. Some firms even threaten to take legal action just to delay paying their bills – dealing with this will also take time and money if you don’t have proper insurance.