Professional Indemnity Insurance

Professional Indemnity Insurance

It’s common for business owners to think that Professional Indemnity Insurance is something only doctors need to worry about. However, in today’s world of constant litigation, more businesses than ever need to consider purchasing this valuable cover. Anytime a business requires some type of licensing in its jurisdiction, this insurance should be in place before opening the doors. All businesses that hold themselves out to offer a professional service are at risk of a professional liability or errors and omissions claim.

There are many professional service businesses that are at risk of a professional liability claim:

  • Real estate agents and brokers
  • Doctors, nurses and other healthcare practitioners
  • Lawyers
  • Insurance agents
  • Accountants and tax specialist
  • Recruitment agencies
  • Investment managers

Practically any business that offers a personal or professional service has a risk of being sued. Even a frivolous lawsuit has to be defended. It costs a lot of money to retain and pay the hourly rate of a lawyer.

The Professional Liability Policy or Errors & Omissions policy pays for defence costs, negotiated settlement costs and damages awarded by the court. Without this valuable cover in place, you risk losing all your hard work and capital investment in your business because of one lawsuit, frivolous or not.

Besides defence costs for claims, the Professional Liability policy also provides valuable coverage for:

  • Alleged or actual negligence - This is when your client or any other 3rd party alleges that you failed in your "duty of care" by giving incorrect advice or made mistakes.
  • Defamation - This type of claim typically results from alleged libel or slander.
  • Copyright Infringement - This cover pays for claims of accidental copyright infringement. This cover is especially necessary for anyone doing business in the IT/Technology industries.
  • Worldwide Cover - For those businesses (especially internet-based) doing business worldwide, the cover will extend to wherever you service as long as any claims are filed in your country of domicile.
  • Historical Coverage - Most professional liability policies will provide retroactive cover which means prior services rendered before the actual start date of the policy can be covered.
  • The Professional Liability and Errors & Omissions policyholder is protected for errors and mistakes, not for intentional acts.

A typical claim example could be as follows:  You act as an independent marketing consultant and are hired to create a nifty slogan for a new product. In error, you accidentally use a slogan that belongs to another company and six months later, that company brings an action against you for violating their intellectual property rights. Fortunately, your Professional Liability policy will provide cover to defend you and pay any settlement costs or judgment against you. Your only cost is the deductible you selected when you purchased the policy.

In today's litigious environment, it is important that the business owner properly transfers the risks associated with doing business, and the most economical way of achieving this is with an insurance policy that can be arranged by your Trusted Union insurance adviser.

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