In this day and age’s service-based economy there is a whole range of professions that essentially provide advice for a fee. Legal and financial professionals are the most obvious examples of this category, but accountants, engineers, construction workers, marketing specialists and many more also fit into this category.
Granted, their work might include a range of responsibilities, but at least in part they offer their clients professional consultations in their respective area of expertise.
Now, these consultations do not always go well. While the aim of them is for the client to get a better idea of how to proceed with, say, an investment, there are occasions when the professional is wrong and the advice turns out to have led the client away from rather than towards success. Such may result in clients blaming the professional and their advice for any consequences, be it financial loss from poor investments on the financial market or a lower quality of life because of deteriorating health. It is for claims like these that you are recommended to purchase professional indemnity insurance if you are in any of the aforementioned lines of work.
What is Professional Indemnity Insurance?
Professional indemnity insurance protects you against mishaps that may result from your professional advice. It ensures that you are not bankrupted by legal action based on what at the time of the event and given the information that was available to you was genuine guidance aimed at benefiting your client.
What Does Professional Indemnity Insurance Cover?
Professional indemnity insurance covers any legal costs that may come out of a client taking legal action against you, as well as any compensation that falls to you if you end up losing the lawsuit. The cover is based on your professional skills, so construction professional indemnity insurance covers construction-based mishaps, accountant professional indemnity insurance protects against financial losses and related lawsuits, engineer professional indemnity insurance against problems arising because of their recommendations and etc.
What Does Professional Indemnity Insurance Exclude?
There are no real exclusions to professional indemnity insurance while it is active, but if a claim is filed after the insurance policy has expired– whether because you have retired or because you have switched to a new professional indemnity insurance broker - you are typically not covered even if the service resulting in the claim was provided during the policy term. For this reason many professionals retain their policies for years after their retirement, though some insurance providers offer optional additional coverage that insure them against liabilities that were initiated during the insurance term, never mind when the lawsuit is filed.
What Does Professional Indemnity Insurance Cost?
Professional indemnity insurance cost tends to be decided by a percentage of the individual’s or organization’s total amount spent on legal services. Premiums are between 0.5 to one percent depending on the chances of lawsuits being filed against you or your company.
Who Should Consider Professional Indemnity Insurance?
Technically anyone who could be held liable for a client’s misfortune as a direct consequence of their services might want to consider professional indemnity insurance. The chances of this are greatest for legal, financial and medical professionals, for which these categories are required by law to have professional indemnity insurance. Engineer professional indemnity insurance, construction professional indemnity insurance and etcetera are optional for the professionals they are made for, but recommendable as professional indemnity claims could just as easily arise in these lines of work.
Professional Indemnity Insurance - some examples of Professional Indemnity Insurance Brokers
There are plenty of good professional indemnity insurance brokers on the market. Some of these are Profession Protect, Professional Indemnity Ltd and Aon Limited, but there are many more out there that should be reviewed prior to making a choice of provider.
Summarising Professional Indemnity Insurance
In short, professional indemnity insurance protects against legal costs that could arise from professional mistakes. There are a wide range of types, from accountant professional indemnity insurance to engineer professional indemnity insurance, but the main difference between them is simply that they cover against errors in a particular line of work.
Depending on the risks involved the professional indemnity insurance cost can be anything from 0.5 to one percent of the policy holder’s total legal expenditure. Regardless of what this amounts to it is hardly a lot compared to what losing professional indemnity lawsuits could cost, so if you are an uninsured professional at risk, look up a professional indemnity insurance broker as soon as you can.
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