What will professional indemnity insurance cover me for? It’s a popular question many small business owners ask. Most professionals who provide a service to clients know they need cover but aren’t sure of the finer details of their professional indemnity insurance policy.
What is Professional Indemnity Insurance Cover?
Professional indemnity cover protects your business and you personally against a breach of duty from an act, omission or error or negligence you may be accused of committing. The insurance cover is specifically for people who offer professional services.
Professional indemnity insurance allows people to use the legal system to defend their reputation and clear their name. Professional service providers rely on their good reputation to stay in business. If a client sues and the professional can’t defend themselves because they don’t have insurance to cover the cost, it may look like an admission of guilt. Other clients and prospects may withdraw their business, and the cost to the service provider can be the demise of their business.
What does Professional Indemnity cover?
Here are just a few examples of times when professional indemnity insurance cover may be used.
Claim for financial loss
Example: A business consultant advises a client to invest in a business that later fails. The consultant could be sued for negligence due to errors in the report that are either real or perceived. Professional indemnity insurance allows the consultant to be defended in court rather than settling immediately.
Personal injury
Example: A physiotherapist deems a patient is fit to return to work or normal duties, but the patient suffers a worse injury. The patient believes the physio was negligent in their duty and sues for the pain and suffering and loss of earnings.
Property damage
Example: An engineer certifies ground suitable for building on but major cracks appeared in the building and the poor preparation of the soil was found to be the main cause. The engineer could use their indemnity cover to pay for the damage to the building.
Public Relations
Example: An IT professional supplies firewall services to a government department which is later hacked causing the computer systems to be shut down for several days. The inconvenience to the public means it is reported in the news and the IT business risks losing current and future clients. The IT company uses their indemnity cover to commission a public relations company to handle media enquiries and reduce the damage to the company’s reputation.
If you are unsure if you need professional indemnity cover or your current policy is adequate, ask one of our experienced consultants by calling Knightcorp on 1300 656 001 or sending us a message.