Business Insurance Users

Professional Indemnity Insurance

Professional indemnity insurance protects doctors, attorneys, engineers, therapists and other highly educated professionals who earn their income by offering advice or presenting solutions. If you've received an advanced level of training in your field and are providing guidance or counsel based on your professional experience, you could be held liable for damages if a client claims that your advice was harmful. Professional indemnity insurance protects you from potentially devastating financial losses if you are pursued for negligence.

Most highly trained professionals are dedicated to their careers and don't intentionally cause bodily injury, illness or loss of property to their patients or clients. However, mishaps do occur, and designs may be improperly executed. Whether or not you intended to cause harm, a client could take legal action if you provided incorrect advice or failed to provide correct advice. To protect your consultancy and guard yourself against small or large claims, you must insure your business with a professional indemnity insurance policy like a homeowner would for a landlord insurance policy.

Legal Requirements for Professionals

Professional indemnity insurance is not only a smart financial choice for professionals; this form of cover is a legal requirement if you earn your living providing counsel to the public. Professional indemnity insurance is a form of liability coverage designed to protect businesses that might suffer financially if they were accused of providing poor advice, of misrepresenting their expertise or of failing to take make recommendations that may have prevented harm. Architectural firms, financial consultancies, software engineering firms and other companies may be required to carry a professional indemnity policy.

If an architectural firm presents a design that proves faulty, the firm might be pursued for compensation for the client's financial losses. A doctor who fails to order a particular diagnostic exam, or a financial consultant who recommends that a client make a decision that leads to a loss of profit may be held liable for the results of these actions. Regardless of intentions, a professional can be held responsible for the adverse consequences of their advice.

Employer's liability cover is a legal requirement if your company or consultancy employs at least one individual. An employer's liability policy insures you against claims brought by employees who are injured or fall ill due to work related circumstances. If you use a corporate car in the course of your business, you are legally required to carry commercial vehicle insurance to protect yourself against claims if you or one of your employees are involved in an accident during the course of your work.

Extent of Professional Cover

An indemnity insurance policy should include legal expenses as well as protection against third party claims. Legal expenses coverage pays for the costs of an attorney and associated court costs. When determining the amount of indemnity insurance you require, your decision may be based in part on your clients' requirements. Some companies or agencies will not do business with a design or engineering firm if they do not carry a minimum amount of indemnity insurance.

Professional indemnity insurance generally includes a limit of indemnity clause, meaning that claims against your business may be covered up to a certain limit, as declared in your policy. The maximum limit depends on the amount of income that your company generates and the level of risk presented by your business. For instance, a physician would most likely require a higher level of protection than a journalist or software designer due to the potential for grave physical harm.

A professional may decide to invest in excess indemnity coverage in order to protect himself or herself against damages that exceed the coverage limit. If damages awarded in a lawsuit exceed your coverage limit, you would be required to pay the balance out of pocket. If you can't pay the balance, as well as the compulsory excess stated in your contract, you may be required to pay much higher premiums for professional indemnity insurance in the future.

Optional Professional Coverage

Many physicians, architects, engineers and other professionals elect to expand their professional indemnity insurance with cover for their premises. Building insurance protects the office or surgery where you counsel your clients and conduct your business. If the structural elements of the building were damaged by fire, falling objects, water escape from broken pipes, faulty electrical wiring or other perils covered by your insurance policy, your building cover would pay out to repair or rebuild the premises.

Combining professional indemnity insurance with additional commercial policies can reduce the cost of your premiums and provide more comprehensive protection. No two businesses go about their work in the same way. Your company will derive more benefits from your protection if you compare quotes from a number of top providers to find a reasonably priced, tailored product that provides the level of financial security that your consultancy requires.

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