Oveview of professional indemnity insurance and who would need it
Professional liability insurance, or professional indemnity insurance as it is also known, is designed to cover the costs of legal fees or compensation following claims of professional negligence.
In the current economic climate very few businesses have cash to spare and if they are hit with a lawsuit it could prove very costly for any business. However, with professional indemnity (PI) insurance a firm should be covered if the worst were to happen.
A lawsuit could result from any number of business practices including providing poor advice to clients, a breach of copyright or even something as simple as loosing data or important documents. The costs of these claims could cripple many firms but added to that is also the fallout of a damaged reputation so by taking out PI businesses would at least be covered. While every business strives to have the best service possible it is always best to have safety net in place.
What’s more for many professions professional indemnity insurance is a legal requirement and without it they could be in breach of their regulatory rules. These include solicitors, mortgage advisers, insurance brokers, financial advisors, accountants and architects. However, if a business provides any kind of advice or professional service then it is a good idea to get some kind of professional indemnity insurance. For example a lot of PR firms, designers and consultants choose to take out PI insurance so that they know they are covered.
It is also important to note that a lot of professional indemnity policies only claims that are made when the policy is live so if a business is closing for whatever reason it is a good idea to get run off cover to make sure that any claims made after the firm has ceased trading are covered. It is also advisable to get run off cover when you change insurers.