As we’ve discussed previously, professional indemnity insurance is a type of liability insurance that protects individuals and companies involved in providing professional advice and services.
It covers a part of the total damages awarded to clients in a civil lawsuit and legal costs associated with defending the client’s negligence claim. Clients may claim damages on the basis of an act, a breach or omission during the course of discharge of professional duty by an individual or a company.
If an omission or a mistake causes a financial loss or injury to your customer, he/she may take the legal route in order to recover the losses suffered by him/her. If such a situation arises during the course of practicing your profession, the PII protects your assets as well as your reputation.
Professional indemnity insurance operates on the basis of the claims made during the period when the policy is in force. This is to say that the policy responds after a claim is notified and not at the time of occurrence of the event.
It is, therefore, very important that you renew your policy each year and maintain continuity as claims have often been made many years after the completion of services.
But who actually needs this type of insurance? We’ve listed a few professions below:
1. Business and Management Consultants
They include marketing, training and education consultants. When you are involved in advising businesses on a day-to-day basis, unintentional incidents do occur. An accident at the premises where you work, an error in some work or the theft of expensive equipment can have a serious financial impact on your business.
2. IT Professionals
IT professionals include IT consultants, contractors, developers and programmers. Often, IT projects do not go according to the plan. As a professional, the risks that you have to deal with include writing a program that is not suitable, damaging a laptop of the client or even a burglary at your office. Sometimes, the financial consequences can be very serious when such an event occurs.
3. Recruitment Consultants and Agencies
Only a few businesses have the resources to overcome an unforeseen event. The risks faced by recruitment agencies and consultants include improper referencing checks on candidates, injury that happens to a visitor at the office and loss of client’s confidential data, among many others.
They include graphic and web designers and interior designers. Some of the risks of practicing these professions include incorrect specification, theft of computer in which expensive software is loaded and even slipping and falling of a visitor at your office.
5. Fitness Professionals
Few fitness professionals such as dance teachers, yoga instructors and personal trainers realise that an unforeseen event could seriously damage their reputation. Moreover, filing of a lawsuit by one of your clients as regards the quality of a service provided by you or an injury sustained during a training program because of your negligence and the loss of expensive training equipment can cost you a lot of money.
6. Teachers and Tutors
Teaching students involves a host of risks. A student injuring himself/herself at your tutoring place or an allegation about poor tutoring can seriously impact your business.
What Are Some Additional Benefits of Having a PI Policy?
First of all, it ensures that you don’t go bankrupt if one of your clients files a lawsuit and claims damages.
Secondly, it covers a part of the legal costs associated with defending a negligence claim and finally, it enables you to do your business with peace of mind.