Why Do I Need Professional Indemnity Insurance?
Mistakes can happen. If your business is found liable for negligence, the costs can be financially devastating. Not only could you be subject to an expensive lawsuit, but your business’s hard-earned reputation may be damaged as a result.
Professional Indemnity insurance is mandatory in some industries such as medicine, accounting, law, and financial advisers. However, even when not required by law, it is often a customer requirement that you have this cover in place. In fact, any business whether large or small, or individuals offering a service in exchange for a fee would still like to consider Professional Indemnity insurance.
Professional Indemnity Insurance covers claims made against your business by customers or other third parties alleging that in performing your professional services, your business has caused them a loss. While policies vary in the benefits they provide, professional indemnity can cover civil liability, inquiry costs, defence costs, fidelity cover, and advancement of costs and expenses.
- Civil liability: Civil liability to a third party arising out of the conduct of their professional business
- Inquiry costs: The cost of defending an inquiry by a regulatory body into the professional conduct of the insured
- Defence costs: The costs involved in defending a claim triggered by the policy
- Fidelity cover: Direct financial loss of the business caused by the dishonest or fraudulent conduct of an employee which is first discovered during the period of insurance.
- Advancement of costs and expenses: Additional costs and expenses incurred during a claim
A claim against you for alleged unprofessional advice, failure to exercise required skill, or breach of professional duty, can be as costly as it is time-consuming. Legal action takes its toll on everyday business running, causing stress and requiring administration and time away from your core activities.
Professional Indemnity insurance can ensure that you have access to the required financial help and expertise to defend yourself; so you can focus on getting back to what you do best. Having adequate Professional Indemnity insurance cover could relieve you from the financial burden that legal costs and compensation represent. Without Professional Indemnity insurance, you would need to pay the costs for any claims made against you out of your own pocket.
This article originally appeared on Tudor Insurance Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Tudor Insurance Australia.