Protecting Professionals With Professional Indemnity Insurance

Professional indemnity insurance is designed to protect professionals from lawsuits arising from negligence. It is primarily utilised by brokers, insurance agents, and other workers in the business of providing financial or medical advice. As you can imagine, these careers are at an increased risk for lawsuits given the speculative nature of financial and medical consulting.

What Does Professional Indemnity Insurance Cover?

Any business that provides advice or offers a professional service to other businesses should contemplate taking out professional indemnity insurance. If your advice is proven negligent, a client could potentially sue your business for their loss.

While accountants and brokers who advise customers on financial investments are the most obvious example, professional indemnity insurance applies to a wide array of professions.

For example, if an architect makes a mistake on a construction project that is already underway, it may result in having to tear down and reconstruct the building, which could result in millions being lost in both materials and time. Moreover, if an employee accidentally sends out an email with a client’s personal intellectual property or company secrets, then you could be held liable for the damages that result. Generally, you will need professional indemnity insurance if you meet one of the following criteria:

  • You provide advice to a client
  • You are given access to a client’s intellectual property
  • Provide any professional service that could be challenged with regard to quality

What Does Professional Indemnity Insurance Cover?

Any financial losses suffered by the claimant will be covered by the insurance policy. In addition, whatever legal fees arising from having to fight the claim will also be covered under a typical indemnity plan. Indemnity insurance will not cover the cost of the excess as well as any loss of reputation resulting from the dispute.

Details to Watch Over When Buying Professional Indemnity Insurance

With any insurance purchase, it is important to thoroughly examine the policy and insure you are covered for the scenarios for which you are at risk. Talk with an agent if you have any further questions. The following are some things to keep in mind when purchasing professional indemnity insurance:

  • Look for any exclusions on the policy before purchasing. Some policies are extremely cheap because they are not as comprehensive. On the flip side, others may provide superfluous coverage and charge extra as a result. Find a policy that suits the needs of you as a professional.
  • Ask your clients what level of cover they expect. Some clients will not work with a professional who does meet their requirement of indemnity protection.
  • Make sure the policy includes cover for legal fees and expenses.

Types of Cover

Most insurance companies will offer multiple levels of cover to choose from, ranging from £50k up to £5 million. The amount you require will depend on your level of risk. For instance, a financial adviser that has corporate clients will opt for a higher level policy than an individual who serves local families. Often times professional indemnity insurance will be bundled together with a larger business insurance policy for additional savings.

Online Comparison Sites

For most brokers and insurance providers, purchasing professional indemnity insurance can require a mountain of paperwork. This can be a source of frustration for many professionals who want to buy a policy without the hassle of having to do extensive research. However, online comparison sites offer a simple and easy way to purchase stand-alone insurance while still performing the diligence required to get a decent quote.