No matter whether you are starting up a business or you are running a successful job for years, every small, medium, or large-sized business should have professional indemnity insurance. Professional indemnity insurance is one of the most vital types of business insurance that covers various legal costs and expenses incurred in your defense. What is more, this type of professional insurance also covers any damages or costs that can be awarded if you are alleged to have provided some kind of faulty or inadequate advice, services, or designs that have ended negatively in your favor and caused your client to lose money.
What does professional indemnity cover?
Even though many people reckon that insurances are mainly necessary in order to cover or protect certain things if something goes wrong, or similar. However, professional indemnity insurance offers specific professional policies for various tailored protection. Any type of business requires some form of insurance, and professional indemnity insurance covers your business in terms of safety and failing to do due diligence. If you make a mistake or give a misleading piece of advice that costs your client money or has harmed their reputation, you need professional indemnity insurance in order to cover all the legal fees and compensation costs. This merely applies if the damaged client takes you to the court for financial or reputational damage, nevertheless, it's utterly significant to own one.
It’s not only vital to have professional indemnity insurance just in case something goes wrong, on the contrary, if your business makes a costly mistake (or the customer claims it has) you would need to have some form of financial assistance to survive and thrive long beyond when the court case finishes.
Example of a specific claim
A veterinary expert was briefed by their client to provide proof that they didn't have to perform a certain surgery on the pet as the client came to the hospital for whole other reasons. The client's precious pet was treated adequately and fortunately left the institution in good health. However, the client has started making false accusations against you to the public, stating that you gave a piece of false advice even though everything turned out successfully. As professional indemnity insurance can provide peace of mind, when the client took the claim to the court, the policy covered all your legal costs and compensation payment. The client didn't peruse their claim that came from negligent acts due to the lack of evidence, but all the costs of the legal procedure were covered and your business reputation remained stable.
Who needs professional indemnity insurance?
If you provide any kind of service, or you have customers that utterly rely on your skills and expertise, you must surely need this type of insurance. Professional indemnity insurance is a must if you want to clear your name, pursue legal avenues to defend your reputation. When you have a full legal team backing you up, you would benefit from the claim and not leave your business shattered. Hence, most key professionals can benefit from professional indemnity insurance such as accountants, IT professionals, recruitment agencies and consultants, marketers, various retailers, designers, architects, and so on.
Besides covering poor advice and creative disputes, professional indemnity insurance helps in a wide range of scenarios and misfortunes even covering for copyright infringement and mishandling data. This means that if you have accidentally sent an email containing some personal or confidential information to the wrong person, and in the end, this results in a civil lawsuit professional indemnity insurance will help you cover the resultant cost.
How much does professional indemnity insurance cost?
When you think about how many legal disputes cost when taken to court and all the factors that needed to be covered in between, the cost of professional indemnity insurance is fairly acceptable. As most businesses would struggle to fund the costs of legal action, paying around $10 a month for professional indemnity insurance (depending on the type and scale of your business) is nothing in comparison to how much it could have cost.
Professional indemnity insurance is critical to all businesses that provide any kind of service to the clients, as only with this special insurance can they rest assured that their name is always legally protected.
Neil White is a lifestyle journalist from Sydney, Australia.
He likes to write about a lot of stuf!
Huge soccer fan.