You may be curious how professional indemnity insurance (PI insurance) works. If you run a company, you may be unsure whether this type of insurance is required for your line of work.
Below you will find a quick rundown of professional indemnity insurance and how it can protect your company when things don’t go as planned.
Defining Professional Indemnity Insurance
When you’re in the business of delivering a service or offering advice, it’s unavoidable for an employee to make a mistake. Perhaps they provide incorrect advice or neglect to convey critical information.
If a client files an indemnification claim, stating that any of these acts caused them financial damage, your company could face significant compensation fees.
If you believe the client’s allegations are without substance and decide to defend the company against them, legal fees can also be a significant expense.
A claim for indemnity may even cause time-consuming disruptions, increased levels of stress, and bad effects on your company’s reputation.
You could be held liable for the activities of your partners, employees, or volunteers as well. In the event of malpractice, professional misconduct, or a breach of duty, professional indemnity insurance can protect your company.
PI insurance is designed to protect you (the insured party) from claims of a breach of professional obligation due to a third party. It provides the best opportunity to avoid or reduce these very expensive costs.
Determining Whether You Need Professional Indemnity Insurance
PI insurance will be crucial when giving clients advice or offering services is a big element of your company. Professional indemnity insurance will be required in certain industries like those providing financial, legal, medical, or accounting advice under state legislation.
Other areas where advice or a service is constantly supplied to a client should think about professional indemnity insurance to safeguard the company and its staff. A few examples are marketing consultants, IT professionals, HR and recruitment firms, clerical services, training consultant services, and more.
Professional indemnity insurance is impossible to overvalue. Even if your profession isn’t under the mentioned industries, don’t disregard the necessity of professional indemnity insurance because it could be very costly to your company if things go wrong.
Exploring the Suitable Policies for Your Business
Understanding whether you require PI insurance is one thing. Knowing how much you require is quite another. This will be very dependent on how your business operates, so make sure the policy you choose is tailored to your company’s specific needs.
You and your company will be susceptible if you don’t have enough coverage. Insurance providers recognise that you may have a budget in mind for the amount of PI insurance you are willing to pay since it is critical to balance these risk preferences.
However, depending on your occupation, a regulatory body may have already determined the type of professional indemnity insurance you require to continue operations.
An insurance provider can help you choose the correct policy by conducting a professional analysis of your company’s needs and recommending a policy that will give an effective level of protection.
Being Protected by Professional Indemnity Insurance
There are numerous circumstances under which PI insurance will kick in. Compensation owed to a third party is demanded when a firm is negligent.
This could involve civil liability claims against a third party originating from the conduct of their professional activity. It could also involve charges and expenses incurred by the company as a result of a claim.
When a company decides to defend a client’s claim, PI insurance can help cover the costs. This is especially valuable when a disgruntled client fabricates accusations, as it covers legal costs that can quickly build up.
PI insurance can cover defence costs in cases when a regulatory agency investigates a company’s professional conduct.
Conclusion
The list above details only a few of the many advantages of having professional indemnity insurance. If you think your company will need this, speak with a trusted insurance provider right away to know your options.
If you need professional indemnity insurance, don’t hesitate to contact New Wave Insurance. We help clients like you find the right insurance for your assets, business, and vehicles. Schedule a consultation with us to learn more.