Anyone can make a mistake – but if your business is found liable for negligence, the costs can be financially devastating.
Not only can it lead to an expensive lawsuit, but your business’ hard-earned reputation may be damaged as a result.
That’s why professional indemnity insurance matters. It helps protect your assets and brand if your services or advice cause a client to take legal action against you.
What is professional indemnity Insurance?
Professional indemnity insurance, also known as professional liability insurance, protects your business for the amounts you could become legally liable for as a direct result of any actual or alleged negligent act, error or omission whilst conducting business.
The costs and expenses incurred to investigate, defend or settle any claim against your business are also included under this cover.
Why professional indemnity insurance is important
If your business were to make an error in design or give incorrect advice, the risk of a potential claim and litigation is very high in today’s business environment. Costs associated with this can put a huge strain on any sized business.
Making sure you have the right professional indemnity cover is vital, so make sure you speak to your insurance broker or provider about your policy details.
What can it cover?
Depending on your policy, professional indemnity insurance can cover:
- Civil liability to a third party arising out of the conduct of your business
- The cost of defending an inquiry by a regulatory body into the professional conduct of your business
- The costs involved in defending a claim
- Direct financial loss to your business caused by the dishonest or fraudulent conduct of an employee which is first discovered during the period of your insurance
- Additional costs and expenses incurred during a claim
What usually isn’t covered?
Professional indemnity insurance policies generally won’t include cover for:
- Commercial liabilities
- Liabilities which result from fraud and dishonesty
- Unpaid fees
The following case study demonstrates how valuable public liability insurance can be.
Michael is an engineer who designs the supporting foundations of a residential property. He makes an error with the site calculations – which leads to the slab cracking and damage to the property of the owner. His company is liable for this loss, which could be anywhere between $150,000 up to the full value of the house. But because Michael has professional indemnity insurance, he’s covered for this amount – as well as any legal expenses if the matter goes to court.
If you’re looking to purchase professional indemnity insurance for your business, contact our team of experienced brokers today.