Have you ever heard about professional indemnity insurance? If so, chances are that you might have needed it. As a part of a larger picture when it comes to insurance, this sector seems to be one of the most important ones in the industry, since the huge variety of products and services this field offers, helps to cover many crucial aspects of one’s business, especially if it is a small, family business or a freelance business, although any professional who offers certain services and works for a larger company, can also be a part of a negligence claim against his work, and it can include both him, individually, and the company he works for, in general.
No matter how you do your business, mistakes can happen, and they do happen quite often. Even more often than you’d expect. Why is this worth mentioning? Not being able to perform in a certain way or to deliver business results as expected is never a good thing. However, it is not that uncommon that these mistakes even lead to a certain kind of negligence, or in other words – breach of duty. As a result, the very professional who has done something that is considered to be below the standards and more importantly – if that action caused negative outcomes, then a claim against this person could be filed. Click here to find out more about it.
On the other hand, it’s important to mention that unlike the real examples of negligence, carelessness or wrongdoing, there are numerous cases where experts or workers have been wrongfully prosecuted only because the client was not satisfied with the work of the person he hired or he collaborated with. This is why there are certain legal instruments that can help if some kind of disagreement between the two parties occurs. And one of them is this type of insurance.
Simply put, professional indemnity insurance offers legal and financial protection to businesses or individuals, in cases of legal action against them, filed by their customers or clients. It is important to mention that this insurance covers up to almost $10 million when it comes to legal expenses (fees etc) which is more than a fantastic help, especially for businesses and individuals that would otherwise suffer tremendous losses that could drain them financially and even diminish their chances for doing business in the first place. Still, you need to keep in mind that the amount of cover depends from case to case and numerous factors that need to be determined in each and every one of them.
Why is the amount of money covered by this type of insurance important to mention? The answer is simple: no one expects to get a claim of this kind. This is why one of the worst things that could happen is being unprepared and therefore unpleasantly surprised. That being said, underestimating the importance of this kind of insurance can cost you both money and energy (and your professional reputation). On the contrary, if you get a lawsuit fully prepared and legally protected, not only will you be covered from many expenses and costs but you will have better chances of winning and proving that you haven’t been negligent, or that your work actually reached certain standards that were expected from you.
There could be several claims that indemnity insurance could save you from or help you with. One of the cases could be that one of your competitors accuses you of stealing their project or ideas which is always something that could be untrue or an attempt to disqualify the competition, or at least financially harm them. You can also be accused of someone’s economic loss, due to some of your actions, which also needs to be proven but could be a tricky matter.
If you lose any of the client’s documents (or they claim you’ve lost it) this could also be a fair reason for a claim against you or your company. The same goes for intentional or unintentional breach of confidentiality (when you by mistake, reveal a business info to a third party, or they claim you did so). Finally, the most obvious claims are the ones that are about personal injuries or property damage caused by your actions, which is usually something that is truthful, although this doesn’t necessarily have to be the case at all times. Generally speaking, you can be accused of a mistake which can be an act or omission, when it comes to your professional services or the services that you provide to your clients or customers.
But how can you be sure that you are someone who needs this type of insurance? Sometimes choosing the insurance package for you or your business can turn into an overwhelming set of choices. When speaking of professional indemnity insurance, it’s always about services and it is often about professional advice that you may give to your clients and get paid for.
Logically, some of the professions that may find this type of insurance to be essential for their professional life, are the professions such as architect, accountant, lawyer, or all types of advisors, which also includes financial advisors. However, these are not the only professions that are in the category of indemnity insurance; or that in other words need this type of insurance.
Therefore, you may be a freelance designer or your field can be digital marketing, or you might be an owner of a PR agency and these areas of expertise could suffer tremendously from a claim about their professional reputation because of a certain mistake they made or a negligent advice they gave. If you thought that you won’t have to deal with a lawsuit if you were giving the advice pro bono or for free, you were wrong. Even this type of advice or service can be a matter of a professional indemnity claim.
Finally, this insurance costs from $50 up to $100 a month on average, although this amount varies according to the size of the company and many other factors, which is a good investment considering the amount of fees this insurance covers.