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Professional Indemnity Insurance

Professional indemnity insurance is specifically designed to protect professionals against negligence that may follow a breach of professional duty by way of an error, omission or neglect. This type of insurance will also provide indemnity against legal, and other related costs and expenses, that will typically be incurred when defending against a claim. There is no way a professional can ignore an allegation of professional negligence, and this allegation must either be admitted to or defended against. No matter which course of action is taken there will always be financial implications.

Professional indemnity insurance is generally required by a professional person who provides advice, design, specifications, supervision, etc. This will typically involve a duty of care to a third party or a client. However, if a professional fails to provide this duty of care to a client they will generally be liable for any losses that may be incurred by the client. Another consideration is that even if you manage to prove your innocence via the legal system, this can still be extremely costly.

It is extremely important to understand that professional indemnity insurance is specifically aimed at protecting the professional, and the cover is in no way beneficial to a client. No client can ever claim directly against a professional indemnity insurance policy that is covered by a professional that they have used. Unfortunately, for the client, they must prove liability first which will usually also be an expensive process for them as well.

If you are unsure whether you require professional indemnity insurance, you should consider whether you offer specific advice, skills or know-how in a particular field. You will generally find that accountants, financial advisers and lawyers are required by law to have professional indemnity insurance. With that said, the vast majority of doctors, health care professionals and pharmacists would never consider practising without it. However, if you are in any type of business that offers professional advice, consultancy services or something similar you should consider having this type of insurance in case you are ever sued for making a mistake.

There are certain other professions within which professional indemnity insurance is a necessity, as these professions tend to carry a higher risk than others. These will typically include architects, engineers, independent financial advisers and surveyors. It is also recommended that if you are a charity or advisory body, who typically offers free advice, it is well worth considering taking out professional indemnity insurance. It is also important to realise that you should be covered, no matter what your line of business, when a claim is made and not the actual date that the mistake was made. Many professionals and professional companies have had claims made against them, even after they have ceased trading.

Professional indemnity insurance will generally have a set limit on the amount that any insurer will pay. This is often referred to as the limit of indemnity. The insurance coverage will usually operate in a specific period of time, which is often referred to as the period of insurance, and all professional indemnity insurance policies are subject to policy terms, conditions, limitations and exclusions. There are two different ways in which the limit of indemnity can work. Firstly, there is each and every claim cover where the indemnity limit will apply separately to every claim that is made under the policy. However, any claims which are made from the same occurrence would always be regarded as one claim by any insurer. The other type of limit of indemnity is aggregate cover where one single amount would be applied for all claims that are made within a specific period of insurance.

The amount of professional indemnity insurance you require will very much depend on the type of business you are involved in. However, in most cases an authorizing professional body will lay down certain criteria that will require a professional business to have a minimum level of indemnity. If ever you are in doubt you should always contact your own authorizing body, although if you seek advice from a professional indemnity insurance broker they will be able to advise you of the specific requirements that are typically required for a particular profession.

You should take a realistic view of the potential legal costs for damages for which any business that you are involved in could become liable. Just imagine if you are underinsured, this is likely to be just as financially damaging as having no insurance at all. You should, however, be aware that only a limited number of companies actually offer professional indemnity Insurance, and therefore it is probably a better idea to seek out a specialist who deals with this type of insurance. You may also find that if you require a number of insurance products, including professional indemnity insurance, you may even be able to receive a discount.

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