This will be a brief guide to understanding what professional indemnity insurance is and why it is very useful to have. We will cover how professional indemnity insurance differs from public liability insurance, who needs professional indemnity coverage, and what is covered. On top of this, we will detail some common claims and explain the factors that determine how much professional indemnity insurance costs.
By the end of this short guide, you should have a good understanding of what professional indemnity insurance is, why you need it, and how to protect yourself against liability claims and steep court costs. Let’s delve into the nuts and bolts of professional indemnity coverage.
What is Professional Indemnity Insurance?
Professional indemnity insurance covers the cost of compensating clients for loss or damage resulting from negligent services or poor advice provided by a business or an individual. This is more abstract than general liability insurance, which covers physical risks, such as bodily injuries. Professional indemnity insurance covers things like errors and omissions made by professionals.
Professional Indemnity insurance goes under different names depending on the field or profession in question. For example, for doctors, dentists, chiropractors, and people in a similar medical field, it is often called “malpractice insurance”. Meanwhile, for lawyers, accountants, architects, insurance brokers, and engineers, it will be referred to as “professional liability” or “errors and omissions”.
How It Is Different From Public Liability Insurance
Well, public liability insurance will cover your business for third-party personal injury and property damage claims that arise as a result of your business activities. On the other hand, professional indemnity insurance covers you if you have provided advice or service to a client and they claim that this has led to their financial loss. Your professional indemnity insurance will also cover the cost of defending the claims made against you. As this can be a pricey business, the insurance is well worth it.
Now that you understand what professional indemnity insurance is, let’s look at who needs this coverage.
Who Needs Professional Indemnity Insurance?
Essentially, as professional indemnity insurance covers errors and omissions in the advice given to clients, any professional who provides advice as part of their service should be covered by professional indemnity coverage.
However, on top of this, any other company that provides a service is exposed to the risk of error and omission claims. These include wedding planners, advertising agencies, freight forwarders, and many more businesses. As you can see, this insurance covers a massive range of business professionals across many fields of expertise. Think about what your business provides its customers. If it is a service and therefore vulnerable to error and omission claims, you too need to be covered by professional indemnity insurance.
How It Can Be Useful
No matter how professional and experienced your business is, there is always a chance you or one of your staff could give advice that turns out to be misguided or make a seemingly small mistake that ends up costing your client a lot of money. These mistakes can lead to liability claims.
As a business owner, you want to protect your business against any and all risks. Personal indemnity insurance protects you against claims that your business provides an inadequate service or a service that is not as expected and advertised, as well as claims of liability for financial loss. If you are a business owner in Queensland, and you are not protected against these risks, look for professional indemnity insurance, QLD online and get coverage to avoid these kinds of claims. Otherwise, the expense of going to court and defending your practice could result in huge financial losses and time wasting for your business.
What Is Covered
Professional indemnity error and omission protection for businesses against whom claims have been made will cover a range of issues. These include contract performance disputes, breach of contract, breach of fiduciary duty, legal fees, loss of sensitive client data, infringement of client’s rights, making a mistake that is expensive for the client to rectify, and providing poor professional advice.
Common Professional Indemnity Claims
A common cause for a professional indemnity claim to be filed is if the business has failed to perform a service on time or correctly. This is a big issue for clients when it costs them money or harms their reputation. Moreover, when the business has caused the client to lose future contracts due to negligence or poor advice given.
Other common professional indemnity claims. It is worth remembering that with professional indemnity coverage, your business will be protected regardless of whether a claim is justified or not.
Cost Of Professional Indemnity Insurance
One of the big considerations you will be taking into account is the cost of professional indemnity insurance, and you will be wondering if it is worth it for your business. The answer is always yes. You cannot know if and when a claim will come your way and the financial repercussions of going to court can end a small business.
The cost of coverage will vary depending on several key factors. One such factor is the type of business you run and its size. Moreover, the nature of the work your business does will impact the cost of insurance. Finally, the cost will be determined by the level of cover your business requires and the excess you are willing to pay.
This has been a brief look at what personal indemnity insurance is, how it differs from public liability insurance, who needs to be covered, how it can be useful, what is covered, common professional indemnity claims, and how much coverage costs. Essentially, any business that provides a service or professional advice to its clients is at risk of facing a professional indemnity claim for financial loss or other issues, such as loss of sensitive client data. If your business offers a service or professional advice, reach out to a professional indemnity lawyer in your area to see if you could benefit from coverage. This could save you thousands in legal fees if a claim arises.