Professional indemnity insurance is a type of insurance which is designed to protect professionals from claims made against them by clients. This type of insurance may cover legal fees involved in a suit, along with any payouts determined as a result of a lawsuit. This insurance product is required by law for people in some professions, and strongly encouraged for others, as a lawsuit can be financially crippling in addition to highly damaging to someone's reputation, and this type of policy can help people weather the strain of a lawsuit.
This type of insurance is designed to provide financial protection in the event that someone makes a mistake and a client sues or makes a claim. Basic professional indemnity insurance just covers negligence, while other policies may cover breach of duty, civil liability, intellectual property disputes stemming from accidental infringement, and loss or damage of data or records. For example, professional indemnity insurance might come into play if an accountant failed to store financial records properly and a client sued.
Doctors and lawyers are often legally required to carry this insurance product, but professionals in all kinds of fields can benefit from carrying a professional indemnity insurance policy. Although the costs of the premiums can be high, especially in high-risk professions, the benefit of the insurance definitely outweighs these costs. A single suit can make the insurance pay for itself, and people in professions which notoriously attract litigation may be involved in several suits over their course of their careers, which certainly justifies the purchase of professional indemnity insurance.
Each profession and professional has slightly different needs. Only a limited number of insurance companies offer this product, and it is a good idea to go to an insurance specialist to discuss whether or not a policy is needed, how large the policy should be, and what types of situations the policy should cover. A good insurance professional will not be afraid to tell someone that the insurance is not necessary or that only a limited policy is needed if he or she believes that extensive coverage would not be in the best interests of the client, and insurance professionals can also provide detailed advice on the types of products and coverage available.
People who require multiple insurance products may be able to receive a discount for buying a package of insurance products which includes professional indemnity insurance. Having insurance issues handled by a single provider can also be beneficial by simplifying matters and making it much easier to file and handle claims.
