What does a professional indemnity insurance policy cover?

Professional indemnity insurance covers the policyholder for the costs of legal action made against them in respect of financial loss which occurs due to the negligence, error, or omission in professional advice or services provided by your business.

What is generally covered by professional indemnity insurance?

Professional Indemnity Insurance is a type of liability insurance that provides cover for the financial consequences of neglect, error or omission by the professional or firm taking out the policy.

What does professional liability insurance cover and not cover?

Unlike some other types of liability insurance, professional liability policies generally protect against claims of financial losses, not bodily injury or property damage. Medical malpractice insurance is an exception to that rule, though, as are policies for architects and engineers.

Why do I need professional indemnity?

Professional Indemnity insurance protects businesses against allegations, whether they are proven to be liable or not. If a client accuses a business or professional of incorrect advice or designs which lead to financial loss or bodily injury, PI insurance protects the insured from high associated legal costs.

Is professional indemnity the same as professional liability?

Professional Liability (also known as Professional Indemnity) allows whole the practice team to do their jobs without always looking over their shoulders. Professional Liability insurance covers claims that are actually made while the policy is in force, even if the error causing it happened years ago.

Module 5: What is Professional Indemnity Insurance

What happens if I don't have professional indemnity insurance?

What happens if I don't have Professional Indemnity insurance? If you don't have this protection then you could be liable for any costs relating to a claim made against you. This could include legal costs and compensation.

Does professional indemnity insurance cover public liability?

The difference between public liability and professional indemnity insurance is that public liability is tailored for claims by members of the public for injury, illness or damage while professional indemnity covers claims by clients for professional mistakes or negligence.

Which type of activity will not be covered in professional indemnity policy?

The professional indemnity or liability insurance will not cover defamation, slander, libel, any breach of contract, the breach of warranty, intellectual property, any personal injury sustained, security, the cost of contract, etc.

How long should you keep professional indemnity insurance?

Traditionally, run off insurance would be maintained in this way every year for up to six years. Six years is the period many professional bodies require their members to carry run off PI for, this is therefore a good benchmark to use for all professions.

Do I need professional indemnity insurance as an employee?

It is not necessary for employees to carry professional indemnity insurance. Employees are indemnified by their employer's vicarious liability.

What are not covered in professional liability?

What Professional Liability Insurance Does Not Include. Coverage does not include criminal prosecution, nor all forms of legal liability under civil law, only those listed in the policy. Cyber liability, covering data breach and other technology issues, may not necessarily be included in core policies.

What does professional liability pay for?

Professional liability insurance is a type of business insurance that provides coverage for professionals and businesses to protect against claims of negligence from clients or customers. Professional liability insurance typically covers negligence, copyright infringement, personal injury, and more.

What are the two basic types of professional liability policies?

There are two types of professional liability polices: claims-made and occurrence. Most professional liability insurance policies are “claims-made,” meaning that the policy must be in effect both when the event took place and when a lawsuit is filed for a claim to be paid.

Does professional indemnity insurance cover breach of confidentiality?

Covers any breach of duty (including breach of duty of confidentiality), in the provision by the insured of the professional services stated in the policy schedule.

Does professional indemnity insurance cover intellectual property?

In summary, if a business owns valuable IP, they should consider protecting it with insurance. While Professional Indemnity insurance will cover them if they breach IP that belongs to someone else, it won't protect them if they want to make a claim for IP infringement – they will need Legal Expenses insurance.

How long does professional indemnity last?

Typically, run-off policies are maintained annually, for up to six years. Six years is the period many professional bodies require their members to carry run-off insurance as this is the usual statute of limitation, so it's a good benchmark to use for all professions.

Are professional indemnity policies claims made?

Professional indemnity cover is usually offered on a claims-made basis. This means that your insurer will only cover you for claims that are brought against you during the term of your policy.

What is professional indemnity insurance for solicitors?

Solicitors' professional indemnity insurance covers claims made against you by a client or third party that alleges negligence, a breach of trust or confidentiality, or defamation. The policy covers the cost of any damages awarded, claimants' costs and the costs of defending the claim.

How do I claim professional indemnity insurance?

What is the difference between public liability and professional indemnity insurance?

Professional indemnity can cover your business for claims against professional negligence while public liability can protect your business if an accident occurs on your property and injures a client.

What is covered by employers liability insurance?

Employers' liability insurance covers the cost of compensating employees who are injured at or become ill through work.

Why is professional liability insurance important?

Professional liability insurance protects small businesses by covering the costs of client lawsuits claiming substandard work. A client may claim your negligence caused them financial harm. And a client that thinks you cost them money may take legal action in hopes of recovering their losses.

Who needs professional indemnity?

You are likely to need professional indemnity insurance if: You provide advice or professional services to your clients (including consulting or contracting) You provide designs to your clients (such as working as an architect or design engineer)

Do companies have insurance for employee mistakes?

Small business owners who provide professional advice or services often ask, “Do I need errors and omissions insurance?” The answer in virtually all cases is, “Yes, you do.” Errors and omissions insurance (sometimes written as E&O or E and O insurance) is professional liability insurance that protects businesses from ...

Whats the difference between insurance and indemnity?

Public liability insurance can cover compensation claims if you're sued by a member of the public for injury or damage, while professional indemnity insurance can cover compensation claims if you're sued by a client for a mistake that you make in your work.