People who practice their professions offer a valuable service. They do so by offering their expertise in a number of fields, such as medicine, law, finance, engineering, and construction, among others. Unfortunately, professionals are not exempt from claims made by their clients or customers in case of a problem. Even with the best of intentions, a doctor, financial adviser, or a lawyer could find themselves at the wrong end of a lawsuit. Professional indemnity insurance can help protect against the costs of these legal actions.
What is Professional Indemnity Insurance?
Professional indemnity insurance is a type of insurance coverage that offers protection for individuals or businesses that offer professional advice or specialist services. It covers the costs (including legal costs and compensation payments) associated with claims against the business in case of a lawsuit due to an omission or negligent act by the policy holder.
Professional indemnity insurance offers coverage for a number of potential risks. Aside from damages caused by professional negligence and/or omission, professional indemnity insurance also covers for unintentional confidentiality breaches and data/document loss. For example, a legal professional handling a case loses data critical to the successful outcome of case could face an expensive lawsuit. An architect who makes a mistake on the design of a building could also be sued for damages and other compensation if the building collapses.
In both cases, the individuals concerned practiced their professions and may have directly or indirectly caused a problem due to their action or inaction.
Who Needs Professional Indemnity Insurance?
Most professionals are required by their respective regulatory bodies to have professional indemnity insurance coverage. However, just because it is not a requirement in your industry does not mean that you should forego getting a policy. If you work in an industry or are involved in a profession that offers advice and/or services, consider getting a professional indemnity insurance coverage if you:
-design structures (such as houses, buildings, bridges, etc.) that will be used
-design artwork or logos for commercial use of clients
-provide professional services and/or advice to clients such as through contracting or consulting
-work or offer services to clients as a self-employed professional or freelancer, consultant, or contractor and the client requires professional indemnity coverage as part of your contract
-need protection against any allegations or claims of negligence or mistakes in your work
What Professions Might Require Professional Indemnity Insurance?
Some of the professionals who can benefit from this type of insurance include:
-Legal professionals such as lawyers
-Business and management consultants
-Teachers and tutors
How Much Does Insurance Coverage Cost?
Insurance premiums are usually paid on a monthly basis and their cost will depend on a number of factors, such as:
-the type of occupation that the policyholder has (usually, a profession that carries a higher risk will be charged a higher cost)
-the size of your business
-the number of individuals who will be covered (may include staff and other workers who may be professionals themselves)
-your history of individual claims
Professional indemnity insurance is an important form of protection for specialists and should be considered carefully to ensure that a business and profession avoid financial losses that could result from a claim.