When you think about Professional Indemnity Insurance in Hong Kong, most business owners think about Malpractice Insurance purchased by doctors and other healthcare professionals. But any business that offers professional or advice services are just as likely to be at risk of professional liability or errors and omissions claims.
In today’s litigious world, more businesses need to consider purchasing this valuable cover as part of their risk management strategy. And in some cases, it’s mandatory as well – if your job requires you to hold a government license, you will likely need to have some form of Professional Indemnity Insurance in place before opening your doors for the first time.
What is a “professional”?
A professional is anyone clients depend on for accurate advice or professional services. Failure to properly provide advice or professional services can cause your clients to suffer a financial loss or a bodily injury. When that happens, you can be sued.
Some common examples of professionals include:
- Real estate agents and brokers
- Doctors, nurses and other healthcare practitioners
- Fitness trainers
- Insurance agents
- Recruitment agencies
- Investment managers or financial advisors
What is the legal duty of a professional?
Professionals are required to exercise a duty of care when performing their duties equal to other professionals in your field – given the same circumstances. This standard is meant to reflect the specialized training you’ve received up to this point.
In layman’s terms, you’re held to the same standard as other professionals in your field and expected to act with the same level of care and knowledge. If you fall short of this standard and cause your clients to sustain a financial or physical loss, you can be held liable in court.
Many professions also have governing or licensing bodies that lay out additional requirements or a code of conduct over and above what is legally required. Make sure you follow those as well or you could face fines or other sanctions.
What are my risks as a professional?
In today’s litigious world, you can be sued for any number of things. But most of the time, we see lawsuits alleging:
Negligence: usually this is when you get sued by someone alleging that you breached your duty of care by giving incorrect advice or by making some kind of mistake.
Defamation: this means that you’ve done something to damage another person or business’ reputation. Usually these claims will be alleging either libel (written defamation) or slander (spoken defamation).
Copyright Infringement: this cover is especially important for businesses in IT or technology as you may inadvertently incorporate some copyrighted works into a project you’re doing for a client.
Breach of Privacy: this is especially important for medical or recruitment professionals who handle confidential data.
What is Professional Indemnity Insurance and what does it cover?
Professional Indemnity Insurance in Hong Kong, sometimes called Errors & Omissions Insurance or Medical Malpractice Insurance (depending on the industry you’re in), covers any settlements or damages awarded by the court should you lose a lawsuit and much more…
Legal Defense & Court Costs
Frivolous or meritless lawsuits are still expensive. If you get sued, your Professional Liability Insurance policy will pay for any costs associated with your legal defense. The insurer will hire a lawyer for you, pay any court costs, pay to bring in expert witnesses, post bonds, and other costs necessary to defend you and your business.
Because the insurer is responsible for paying any damages awarded, it is in their best interest to dig deep into their pockets and bring in the best legal team possible to defend you. Not only does this take away your financial burden, winning the lawsuit can help protect your business reputation.
Most policies will extend your cover to liability arising out of your professional activities anywhere in the world as long as the claim is filed in your home country. This is especially important for internet-based businesses or consultants that work with clients all over the world.
Most Professional Liability Insurance policies will cover liability arising out of services rendered as far back as a few years before the start date of the policy. This is handy when switching insurers or for first-time buyers.
Intentional Acts Excluded
As with most insurance policies, intentional acts will not be covered.
For example, let’s say you are an independent marketing consultant hired to create a slogan for a new product line. If you accidentally use a slogan that is substantially similar to an existing product, you could be sued for violating their trademark rights. Luckily, because it was not intentional and you had Professional Liability Insurance, the insurer will pay for your defense and any damages awarded to the plaintiff. You’ll just need to pay the deductible – a far cry from the full force of the trademark lawsuit.
Do I need Professional Liability Insurance?
In short, the answer is yes. Some professionals like doctors or insurance brokers will need insurance before they can receive their license and do business. But even if it’s not a requirement, it can still be a worthwhile investment as clients will feel more confident doing business with you if they know you’re insured. In a competitive business environment, that could be the difference between winning and losing an important deal.
In today’s litigious environment, it’s more important than ever for business owners to find ways to transfer some of the risk of doing business. Professional Liability Insurance is a great way for business owners to transfer risk, protect their reputation and ensure the business has the funding necessary to survive a lawsuit.
If you’re interested in learning more about how Professional Indemnity Insurance in Hong Kong can fit into your business’ risk management/compliance plans, contact a licensed Trusted Union insurance adviser.