Should I keep professional indemnity if I stop trading?

[bcontractor]

I have recently stopped contracting and moved onto permanent employer. The plan is to make my company dormant for the time being and I am not anticipating trading via the ltd.

As part of my accountancy package I receive employers liability, public indemnity and professional indemnity insurance.

I could downgrade to a cheaper accountancy package that would not include these insurances. However, would it be unwise to stop having professional indemnity even if I'm not trading? Could a previous client still decide to take legal action against me and in that case should I keep the insurance? It is very unlikely, but I just thought I'd ask.

[Lance]

general guidance suggests to keep PI running for a while.
To be honest though, it's such a low probability of any claim it's almost certainly not worth it.
If you've screwed up at a client recently, and yoiu have reserves in the company then you might take a different view.

If you have little or no reserves then why not just close the company if you're not using it?

[Old Greg]

I have recently stopped contracting and moved onto permanent employer. The plan is to make my company dormant for the time being and I am not anticipating trading via the ltd.

As part of my accountancy package I receive employers liability, public indemnity and professional indemnity insurance.

I could downgrade to a cheaper accountancy package that would not include these insurances. However, would it be unwise to stop having professional indemnity even if I'm not trading? Could a previous client still decide to take legal action against me and in that case should I keep the insurance? It is very unlikely, but I just thought I'd ask.

A former client could in theory take legal action against your Ltd, not against you. So the exposure to the risk is your Ltd's assets.

[Yuri F]

...So the exposure to the risk is your Ltd's assets.

..or liability?

[Old Greg]

..or liability?

No. The Ltd could be liable for millions. But if the Ltd only has assets of £500, that is the exposure.

[Yuri F]

ohh, so confusing, depends then..

[GhostofTarbera]

I would cancel immediately

Millions of contractors per year takes these out

I can think of 2 that have ever been reported (in 20 years) there has been claims against


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[Lance]

ohh, so confusing, depends then..

not really confusing.

What exactly do you think a limited company is?
It's limited liability, ie. the owners of the company are not liable for the debts of the company.

[Old Greg]

not really confusing.

What exactly do you think a limited company is?
It's limited liability, ie. the owners of the company are not liable for the debts of the company.

Yuri is saying he's confused, OK?

[rootsnall]

I would cancel immediately

Millions of contractors per year takes these out

I can think of 2 that have ever been reported (in 20 years) there has been claims against

Rightly or wrongly I've never paid for any.