A professional indemnity insurance policy is a financial product to compensate the insured (your business) in the undesirable event of damages accrued from a claim being made against the business due to contravention of duty within the policy period for neglect, error, or omissions. Still not sure? In its most basic form, this insurance policy covers your business for a loss that may arise from negligence caused by your business while carrying out such business. Professional indemnity insurance policies have a tendency to vary greatly in the amount of cover the policy provides.
There are a number of instances in which a business may have need to
call upon their professional indemnity insurance policy. The first
possibility is that a business provides a service to the purchaser, and
due to a negligent act, a negligent omission, or other type of negligent
error, carries out the work in a slipshod manner, which may lead to
further issues arising down the road.
The same scenario could also apply to advice given by a business.
Professional indemnity insurance also protects against allegations of
the supply of false, or otherwise generally misleading information. The
third most common situation that may require the use of a professional
indemnity insurance would be the unknowing or otherwise accidental
encroachment of the intellectual copyright of another, be it an
individual, a business, or other organisation. Intellectual material is
also considered property, and the same copyright laws protect it.
A professional indemnity insurance policy may have a variety of aspects
of coverage, but there are also particular elements that for a number of
reasons have been excluded from the policy. Often, the professional
indemnity insurance policy will include protection against claims made
against your business from a civil liability case, claims that have
arisen from the loss of documents, or if documents have been damaged.
Legal costs such as those that may arise in the defence case include,
but are not limited to, the hiring and retaining of lawyers, the court
costs, hiring of professional witnesses or experts of the industry, and
so forth, may or may not be included dependant on your selected policy.
Other elements not covered will usually include elements pertaining to
war and terrorism (including nuclear activity), pollution unless
considered as a breach of duty of the business, potential claims known
about when the policy was first purchased, and claims that should be
covered under an additional policy, such as buildings, contents, or
Any physical products (except possibly software and programming products
used for the business that have been amended in some way) are not
covered by professional indemnity insurance. The insurance policy will
also not cover any fines and penalties, or claims from by an insurance
company unless a judgment has been received declaring otherwise. Certain
warranties set by your business may also affect the coverage provided
by your professional indemnity insurance, such as a guarantee of
outcome, whether express or implied.
So who may need to have a professional indemnity insurance policy? The
most common industries where businesses shop for a professional
indemnity insurance quote are those whereby a service is provided as
opposed to a physical product. This includes businesses in the fields of
accounting or other financial services, graphic design firms, marketing
and internet marketing businesses, and surveyors, and management or
Other, more product based rather than service based, businesses, may be
better with a shop insurance quote. It is always possible to get a shop
insurance and professional indemnity insurance quote and compare the two
to see which will provide your business with the most appropriate
coverage. Bear in mind that it is very easy to shop for professional
indemnity insurance online. It is recommended to get a few quotes for
comparison, and ensure you select a policy that is comprehensive enough
for your requirements. For example, some policies are more inclusive and
will cover the bracket of 'any civil liability'.