If you are involved in jobs that require you to provide legal or financial advice to clients, then it is essential that you protect yourself with professional indemnity insurance (PII). Referred to also as professional liability insurance or errors and omissions insurance, it protects you from bearing the complete expenses of defending a negligence claim filed by a client and damages awarded in a civil lawsuit. Some of the professionals who require PII cover include architects, accountants, solicitors, engineers, estate agents, designers, advertising firms, contractors and IT Consultants, among many others. The aim of this article is to highlight the benefits of having a PII cover to protect you and your business.
Why You Should Have A Professional Indemnity Insurance
Many professionals often neglect PII to their own detriment as small mistakes can crop even if they are extremely good at doing their jobs. This could eventually lead to clients making damage or loss claims against you. If you are not covered by a PII, you could end up losing your business, livelihood and at times your home. You are not legally bound to protect yourself with PII, but most companies will either insist or give preference if you have one when entering into contracts with you for professional services. This is because it helps protect the interest of both the parties.
What All Does A Professional Indemnity Insurance Cover Protect You From
Basically, the PII provides protection to your business against claims of damage or loss made by one of your clients or a third party. The claimant may allege that you have either made a mistake or been negligent in the case of some or all of the services provided by you. Some of the different types of claims against which indemnity insurance can protect you are as follows:
Negligence when providing a service: This is best explained with the help of an example. Imagine that you are a website manager and your job is to take care of clients’ websites. When discharging your duty as a website manger, assume that an important web page gets deleted by error. The website owner could claim damages for the revenue lost.
Infringement on intellectual property rights by accident: An example for this would be a publisher who allegedly replicates content or ideas from previous jobs. Large compensation claims can be made against the publisher for such an act.
Loss or damage of important documents: During the course of your professional work, you may spend a lot of time in busy offices, on the road and in travel. The chances of you losing some important documents or some of them getting damaged are potentially very high. It may not practically be possible for you remain careful always. However, a professional indemnity policy can protect you against financial repercussions of such losses or damages.
Accusations of slander or libel: You may be an extremely careful professional, but there is always the risk of accusation of slander or libel being made against you when you deal with different clients or customers. Something as simple as publishing a blog could get you or your business into serious legal or financial problem, if someone perceives it as an offence or as something that damages their reputation.
Aspects To Be Kept In Mind With Respect To Professional Indemnity Insurance
The most important aspect is an examination of the terms prior to purchasing the policy as it can vary from one insurer to the other. The other aspects to be kept in mind are as follows:
The policy must be live when a claim is made against you.
Many insurers may include a retroactive date in the policy issued by them. This covers any work done by you earlier. This is important if you have carried out some high risk jobs in the past.
Summarizing, it pays to be prepared for any legal eventuality by purchasing professional indemnity insurance. You can practice your profession with peace of mind.
Josie is passionate business blogger and works for a provider of professional indemnity insurance.