If you’ve been researching different types of commercial insurance coverage to find out what you might need, you’ll almost certainly have come across the term professional indemnity insurance. This article will give you a general overview of this type of insurance, and hopefully some insight into whether it’s necessary for your business.
So what is it?
Professional indemnity insurance is a type of business insurance designed to cover the cost of legal fees and expenses when a claim is made against your business. Unlike compensation granted for personal injury, which is usually covered by either public liability insurance or employers’ liability insurance, professional indemnity insurance covers claims relating to financial loss as a result of inadequate advice or service.
For those of you who want more information on what it actually covers and typical costs, Hiscox answer the question ‘what is professional indemnity insurance?’ in more detail on their website, as well as providing some examples to help put things into context.
Do I need it for my business?
If you offer advice, handle sensitive data, or provide any form of professional service, it is strongly recommended that you take out professional indemnity insurance as part of your commercial insurance policies.
It can be used to cover you in the event of a lawsuit resulting from a variety of alleged errors and oversights that could otherwise cost you thousands. Professional indemnity insurance can protect you in the event of a deformation or copyright infringement, as well as cover any financial loss your client has incurred by following your advice, or through misuse of their data.
You may have fantastic relationships with your clients now, and your company may well follow every guideline out there, but there is always a chance that something will go wrong, and the client will blame you for it. Professional indemnity insurance can protect you from bankruptcy in this situation.
Do I have to take out a policy?
While it’s not compulsory for all businesses to take out this type of policy, virtually every organisation is at risk without it. It is also worth noting that many companies will only work with businesses that have professional indemnity insurance in place. These businesses are seen as more trustworthy and reputable, and their insurance shows they are properly protected in the event of a mishap.
In some professions however, this type of insurance policy is actually mandatory. Accountants, private healthcare professionals, and architects are just a few examples of businesses that are required to take out a professional indemnity policy. Without one, they can have their charters or accreditations revoked by their regulatory bodies.
While not a legal requirement for every business, professional indemnity insurance policies can protect you against unforeseen circumstances that could otherwise leave you financially broken and even faced with the decision to close your business.
If you think your company could benefit from the inclusion of this type of policy, be sure to speak to a reputable insurance broker immediately.
This content is sponsored by Suhail Ajamal.
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