Professional Indemnity Insurance

Professional Indemnity Insurance

When you think about Professional Indemnity Insurance, most business owners think about Malpractice Insurance purchased by doctors and other healthcare professionals. But any business that offers professional services is at risk of professional liability or errors and omissions claims.

In today’s litigious world, more businesses need to consider purchasing this valuable cover. And in some cases, it’s mandatory as well – if your job requires you to be licensed, you will likely need to have Professional Indemnity Insurance in place before opening the doors.

What is a “professional”?

A professional is anyone who has clients that depend on them for accurate advice or professional services. Failure to properly provide advice or professional services can cause your clients to suffer a financial loss. When that happens, you can be sued.

Some common examples of professionals include:

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.


this means that you’ve done something to damage another person or business’ reputation. Usually these claims will be alleging either libel or slander.

Copyright Infringement:

this cover is especially important for businesses in IT or technology

Breach of Privacy:

this is especially important for medical or recruitment professionals who handle confidential data.

What is Professional Liability Insurance and what does it cover?

Professional Liability Insurance, sometimes called Errors & Omissions Insurance (depending on the industry you’re in), covers any settlements or damages awarded in lawsuits and much more…

Legal Defense & Court Costs

Frivolous or meritless lawsuits are still expensive. If you get sued, Professional Liability Insurance 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, 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.

Worldwide Coverage

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.

Historical Coverage

Most Professional Liability Insurance policies will cover liability arising out of services rendered 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.

Do I need Professional Liability Insurance?

In short, the answer is yes. 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 this can fit into your risk management/compliance plans, contact a Trusted Union insurance adviser.

Get a Free Quote

For a free consultation for professional indemnity insurance quote please click below