What is Professional Indemnity Insurance?
Professional Indemnity Insurance provides cover if you become legally liable to a member of the public (usually a client) following an error or omission in the professional advice, design, certification or service you have provided them with and as a result they have suffered a financial loss. The Limit of indemnity can vary usually depending on your specific occupation and client requirements.
Who needs Professional Indemnity Insurance?
Anyone engaged in the provision of professional services, whether this be advice, consultancy, design, certification, planning or representation has a potential exposure to a claim being made against them by a client in respect of their responsibility for loss as a breach of professional duty. One of the main reasons we need Professional Indemnity Insurance more than ever is the fact that we live in a society where legal claims are actively encouraged so the trap is even greater. The best way to avoid these claims of professional negligence, defamation of character, loss of data – is to take due care but even for the most conscientious business it can be surprisingly easy to slip up. Professional Indemnity covers items like legal defence costs and various expenses, as well as subsequent compensation and including third party legal costs.
What does Professional Indemnity Insurance Cover?
Professional indemnity insurance covers you in case you need to pay to correct a mistake, or to cover legal costs, if you make an error in your work. While this falls under cover for ‘negligence’, you should also consider a policy that offers cover for dishonesty, defamation and loss of documents too. You may also need it if your IT system fails causing you to lose some of your client data or documents, and they’re difficult and costly to retrieve. A case for infringement of intellectual property rights could arise when incorporating copyrighted stock images without first asking for permission. Professional Indemnity insurance can cover you for all these eventualities from the start of your policy, but if you’re worried that work you’ve already done may need to be protected against a claim you can also get a retroactive date for your policy.
Remember: If a customer or client alleges negligence on your part, the Professional Indemnity Insurance policy will first and foremost pay the legal costs involved in defending you, irrespective of whether you are at fault.