What is Professional Indemnity Insurance? – Insights

What is Professional Indemnity Insurance? – Insights

If you are claimed to have provided insufficient or inappropriate advice, services or designs to a client, professional indemnity insurance in Sydne provides cover for the legal costs and expenses in defending the claim, as well as reward payable to your client to resolve the mistake.

In spite of how many years experience your organization may have, there is always the alternative you (or one of your team) could make an error. Professional indemnity insurance covers against a wide range of situations, including:

  • Professional carelessness (i.e. making a mistake in a chunk of work for a customer)
  • Loss of files or data
  • Accidental breach of copyright and/or confidentiality
  • Libel and defamation
  • Loss of goods or cash (your own or for which you are accountable)

Is a professional indemnity insurance necessity?

In respect of industry bodies’ narrow needs, many business divisions need PI insurance – surveying, engineering and accountancy to name but a few. Professionals working on a contract basis – such as management advisors, business advisors, and IT professional that are outsourcing the work – will almost certainly need PI insurance in order to be awarded a contract.

However, even if you are not officially obliged to have PI insurance, without it you could have to pay thousands of pounds in compensation and legal fees to defend a claim. This would be in addition to the opportunity cost of time spent protecting the claims.

Regardless of how large or small a business, without PI cover your financial reputation could be left vulnerable if a claim is brought against you. Although most professionals struggle to provide the best possible service, people do make mistakes; knowing that adequate insurance is in place will give you peace of mind that your organization is covered.

What boundary of professional indemnity do I require?

Selecting a professional indemnity insurance boundary depends on your firm’s situations. If you require PI insurance for a specific contract, it’s likely the customer will have specified a minimum amount. This is often the case for industry bodies too, so check before managing cover.

Otherwise, consider the worst case situation if you were to make a mistake in a chunk of work for a customer, and estimate the cost of putting it right. Remember to take into account any legal fees and losses that could be incurred by your client as a result of the error.

Who does need professional indemnity insurance?

When anyone offers advice, service, consultancy or design to the customer, he/she should give serious consideration to professional indemnity insurance.

While most organizations enjoy good relationships with their customers, a mistake in a project can change working dynamics suddenly. The possibilities are that if a customer undergoes a significant financial loss as an effect of your negligence, they are likely to look for recompense. Professions that may require PI cover include private tutors, IT professionals, and consultants, recruitment professionals, teachers, dance teachers, fitness professionals, and designers.

You can consult a claim specialist in Perth to get more information about professional indemnity insurance in Perth.

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