Don’t Ruin Your Profession: Get Professional Indemnity Insurance
What is Professional Indemnity Insurance?
Professional Indemnity Insurance (PII), also known as Professional Liability Insurance (PLI) or Errors & Omissions (E&O) insurance, is a form of liability insurance that protects professionals from the legal costs and damages arising from negligence, errors, omissions, or malpractice in their services or advice to clients. Professionals such as doctors, lawyers, architects, engineers, chartered accountants, and consultants are exposed to various risks and liabilities in their work, and may face lawsuits from dissatisfied or harmed clients who claim financial losses or bodily injury due to their professional conduct.
What are the consequences?
The consequences of not having a Professional Indemnity Insurance can be severe and costly for professionals. Without this insurance, professionals have to bear the full burden of defending themselves against any claims made by their clients, which can involve hefty legal fees, court expenses, and settlement costs. Moreover, they may also have to pay for the damages awarded to the claimants, which can be substantial depending on the nature and extent of the harm caused. These expenses can have a significant impact on the professional’s finances, reputation, and business prospects.
What are the scenarios may result in claims?
Some examples of scenarios where professionals may face claims without a Professional Indemnity Insurance are:
- A doctor misdiagnoses a patient’s condition or prescribes a wrong medication, resulting in worsening of the patient’s health or death.
- A lawyer misses a deadline or makes a mistake in drafting a contract or filing a lawsuit, resulting in loss of a case or breach of contract for the client.
- An architect designs a faulty building or structure that collapses or causes injury to the occupants or visitors.
- An engineer makes an error in calculating the specifications or testing the quality of a project, resulting in failure or damage to the project or third parties.
- A chartered accountant makes a mistake in auditing or preparing the financial statements or tax returns of a client, resulting in penalties or fines from the authorities or loss of income for the client.
- A consultant gives wrong or misleading advice to a client that leads to poor business decisions or outcomes.
Therefore, it is advisable for professionals to have a Professional Indemnity Insurance that covers them for all legally established claims arising from their professional duty. This insurance can provide them with peace of mind and security in case of any unforeseen circumstances that may jeopardize their career and livelihood. A Professional Indemnity Insurance can cover the following aspects :
- Legal liability due to bodily injury or death caused by breach of professional duty by the insured or their employees
- Payment of defense costs, fees and expenses incurred with the prior consent of the insured
- Retroactive coverage for claims related to incidents that occurred before the activation of the policy but within a specified period
- Exclusions for certain claims such as criminal acts, intentional non-compliance with statutory provisions, dishonest or fraudulent acts, personal injuries such as libel or slander, infringement of intellectual property rights, etc.
There are various factors that affect the cost and coverage of a Professional Indemnity Insurance policy, such as the type and nature of profession, the scope and scale of services offered, the level of risk involved, the amount and limit of indemnity required, the retroactive date chosen, etc. Professionals can compare and choose from different plans offered by various insurance companies according to their needs and preferences.
In conclusion, having a Professional Indemnity Insurance is essential for professionals who provide services or advice to clients that may expose them to legal liabilities. This insurance can protect them from the financial and reputational consequences of facing claims from their clients due to negligence, errors, omissions, or malpractice in their professional conduct.
For more information/guidance on getting the right insurance plan for your profession, write to us at [email protected].