What is professional indemnity insurance?
Published On Apr 14, 2023 10:00 AM By InsuranceDekho
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Regardless of how well your organisation is performing, there are high chances that you or anyone from your organisation makes some error that results in unsatisfactory services. In light of this many insurance companies now offer professional indemnity insurance keeping in mind the risk that is involved in serving clients. Most professionals such as lawyers, doctors, clients serving businesses, chartered accountants and others now take the advantage of professional indemnity insurance to get coverage for legal liability. Thus, to help you understand all about professional indemnity insurance, here is a blog that provides a complete guide to the same. Read on to learn more.
What Is Professional Indemnity Insurance?
In case you are providing service or advice to different clients, then there is a high chance that due to some circumstances the services you provide become professionally inadequate. In such a case, your clients may sue you and to prevent such legal consequences as well as to help you rectify your mistake by providing financial compensation to clients, an insurance product like Professional Indemnity becomes very important. This type of insurance is meant by different groups such as doctors, chartered accountants, medical practitioners, and more.
Benefits of Professional Indemnity Insurance
In today’s highly competitive world, the chances of going wrong in providing professional services are quite high. Professional Indemnity Insurance provides coverage in this case and has several other benefits as the following:
- Provides coverage for legal consequences and financial losses to both small and large organisations in case they provide unsatisfactory services to their clients.
- Offers compensation in case you are responsible for handling client’s data and fail to keep it safe.
- In case confidentiality or copywriting issues arise, then Professional Indemnity Insurance provides coverage for that as well.
- With Professional Indemnity Insurance, you can save a lot of money that might go into compensating for the losses incurred by your clients due to your organisation.
- In case you provide the wrong professional advice to your clients and they raise a claim against you, then Professional Indemnity Insurance will cover the relevant costs. Apart from this, any professional negligence is also covered under Professional Indemnity Insurance.
- With Professional Indemnity Insurance, you can also manage to save the reputation of your company and build a greater client base.
Who Should Take Professional Indemnity Insurance?
Ideally, all the small and big firms providing client-based services must purchase Professional Indemnity Insurance to be on the safer side. Listed below are professionals who must buy Professional Indemnity Insurance:
- Medical practitioners including surgeons, pathologists, cardiologists, etc.
- Law practitioners such as lawyers and advocates
- Interior designers and architects
- Chartered accountants
- Financial accountants
- Real estate brokers
Factors Affecting Professional Indemnity Insurance
There are certain factors that can affect Professional Indemnity Insurance premium costs such as the following:
- Based on the type of business you are running, the Professional Indemnity Insurance can vary. If your risk involves a high-risk, then the premium will be higher.
- The geographical location of your business area also largely determines the premium amount of Professional Indemnity Insurance. For instance, if you are a contractor and are working in hilly areas, then chances are that the premium amount will be higher.
- The age of your business also affects the premium of Professional Indemnity Insurance.
- The size and turnover of the business can also affect the Professional Indemnity Insurance premium amount.
- The claim history of the business owner also affects the premium amount of Professional Indemnity Insurance.
Exclusions of Professional Indemnity Insurance
There are certain things that are excluded from Professional Indemnity Insurance. Listed below are the exclusions of Professional Indemnity Insurance:
- If you commit any error under the influence of drugs or alcohol, then there is no coverage offered
- Any type of law violation is not covered. Further, any type of crime is also not covered under Professional Indemnity Insurance.
- In case you intentionally provide inadequate service to hamper the status of your client, then no compensation will be provided
- Any dispute between you and your employee is not covered
Thus, in order to maintain your professional image from getting hampered, then make sure to buy a Professional Indemnity Insurance. This insurance plan not just offers protection but also helps to continue serving your clients in an even better manner. So, purchase Professional Indemnity Insurance to protect your business against different kinds of losses.
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