You face various risks when running a business, and thinking about the possibilities can quickly overwhelm you. Many insurance policies cover these risks, which will help you run your business with assurance and confidence. Still, it can be challenging to figure out which policies suit your business the most, given the vast number of insurance products out there.
One policy you may want to consider is professional indemnity insurance, which is especially relevant to those in professions where your primary offering is providing your clients with advice. A professional is anyone who “provides advice or services of a skilful character according to an established discipline,” which means you may be responsible for any adverse consequences that arise from your client following your advice. You may be faced with a compensation claim when giving incorrect professional advice or services, which can significantly set back your business. Here’s what you need to know about professional indemnity insurance:
Understanding Professional Indemnity Insurance
Professional indemnity insurance protects you against claims for liabilities owed to a third party, usually your client, for the loss they suffered from the provision of your professional services. ‘Indemnify’ means covering the insured for the liability owed to the party that suffered a loss. For this reason, professional indemnity insurance can safeguard your business against claims for financial loss, bodily or personal injury, or property damage resulting from actions arising from the delivery of your professional services.
For instance, if a migration agent offers incorrect advice regarding visa requirements, they may face a potential claim for compensation against the insured. Getting this insurance policy can protect you from expensive, tedious claims that can quickly sink your business in litigation costs, which is why it’s worth considering.
The Importance of Professional Indemnity Insurance
Even if you’re meticulous about preserving confidentiality and privacy in your transactions, you may unintentionally breach this commitment, omit information, make an error of judgement, or simply provide incorrect advice. An act, omission, or mistake can quickly lead to a claim against your business, which is why it is vital to protect yourself, your reputation, and your business.
Professional indemnity insurance covers the legal costs that come with defending any claims, which can quickly skyrocket. Court and other kinds of legal fees needed to defend your business are usually underestimated, and small businesses will often struggle to repay all of this, whether or not they are deemed liable for the damages. Additionally, court cases can drag on for months or years, and the ongoing fees can severely hurt your business. However, this kind of insurance can insulate you from having to pay the total cost of the claims, allowing you to continue running your business with as few disruptions as possible.
Who Benefits from Professional Indemnity Insurance?
Many professionals, like architects, marketing specialists, lawyers, bookkeepers, accountants, and engineers, will benefit significantly from professional indemnity insurance. Those with more hands-on jobs are less likely to need this, although it may still be helpful for some people, like agricultural consultants, life coaches, and event managers.
Regardless of the industry, you work in, you are responsible for the services or advice you provide. If you end up dispensing incorrect advice, you may be liable to pay for the losses that result from the client following your guidance, which is why professional indemnity insurance is a worthy policy to have.
The Cost of Legal Action
Many companies brush off the cost of legal action and grossly underestimate it. However, the cost for a defence can easily reach upwards of $100,000, a figure that most small businesses cannot pay. When lawsuits extend several years, the cost can reach $1 million in just legal fees, as evidenced in a case handled by CGU Insurance. Luckily, getting insurance can protect you from this exorbitant amount, helping you keep your business afloat.
Conclusion
Whatever your profession or business size, professional indemnity insurance can give you the peace of mind needed to work optimistically and confidently. With less risk to worry about, you can focus on making strategic decisions for your business that bring you closer to success.
New Wave Insurance is a team of insurance brokers offering all kinds of business insurance on the Gold Coast. We help you find the right insurance for your assets, business, and vehicles, including professional indemnity insurance. Contact us today for a consultation!