Professional indemnity insurance is just that – protection against legal costs or claims for damages for people who provide services or advice to clients. Professional indemnity insurance is not for everyone, but it is the perfect insurance solution for some business owners.
Importance of Professional Indemnity Insurance
Professional indemnity insurance is important for those who provide services or advice. If your services do not meet a client’s expectations, you could endure financial loss and face a costly claim. Professional indemnity insurance protects you from such losses. It is recommended for those who provide knowledge, skills or advice as their profession.
Who Needs Professional Indemnity Insurance
If you are someone who provides a service to customers, you may want to consider professional indemnity insurance. Professionals who are solicitors, accountants, financial service providers, consultants and media service providers are just some of those who would benefit from professional indemnity insurance. If something goes wrong, such as a claim against you or your business services, you are held responsible for your actions. This could substantially affect your finances, reputation and even your employees or volunteers.
Covered by Professional Indemnity Insurance
Your professional indemnity insurance policy should provide coverage on a few basic people related to your business, such as your business, principal, any employees or related entity. Standard professional indemnity insurance will cover claims of civil liability related to your services and costs associated with the claim. Some policies will cover criminal prosecutions, such as legal services for allegations made against you. Additionally, some offer coverage for fines and penalties that are associated with a professional services claim.
Exclusions from Professional Indemnity Insurance
There are some exclusions to professional indemnity insurance. When you purchase a policy, your insurance company will provide an amount that is covered. Any claims that go above the amount will most likely not be covered by your policy. If your policy expires and you have not renewed it, then any claims happening after that time will not be covered. Most professional indemnity insurance policies will also include a list of excluded activities or overseas work that will not be included for coverage. Additionally, if you leave your profession or stop services, or if you retire, then you will probably not be covered against such claims under your professional indemnity insurance plan.
Amount of Professional Indemnity Insurance Needed
There is not one particular business insurance policy that fits, as all businesses are different, so are the professional indemnity insurance policies that serve them. Consider determining what your risks are related to the service you provide and who you provide service to. Your professional indemnity insurance should cover total costs related to legal claims and negligence claims against you. It is also important to consider the magnitude of the businesses or clients you serve. If you have big companies, they may have larger budgets for legal fees, whereas smaller companies may not have such budgets.