What does Professional Indemnity Insurance cover?
When you run your own business there is always the risk of a claim occurring, no matter how much care you take when delivering your professional services.
In today’s increasingly litigious environment, a claim could be enough to bankrupt a business, regardless of how big or small it is.
Professional Liability insurance is designed to protect your business from legal claims for alleged negligence or a breach of duty arising from an act, error or omission arising from the services or advice your business provides.
What is covered?
- Damages and claimant costs awarded against the insured
- Legal and defence costs
- Claims investigation costs
- Inquiry attendance costs
- Public relations costs
What is NOT covered?
- Intentional damage
- Known claims and circumstances
- Fraud and dishonesty
- Bodily injury / property damage
Other areas Professional Indemnity insurance can provide cover for include:
- Copyright infringement
- Breach of duty, including privacy infringement, confidentiality and other privacy related issues
- Violation of intellectual property rights
- Defamation, libel or slander – resulting in public relations and reputation management costs
- Damages for loss of important documents
What does this mean for your business?
If your business provides advice to others, you run the risk of a potential claim being made against you, if a client finds the advice to be unsatisfactory.
Whether you are at fault or not, you may need to spend an extensive amount on legal fees to defend against the claim of liability. Professional Liability insurance can cover the cost of the claim for compensation and the costs associated with defending your claim.
Even if you aren’t at fault, if the client’s claim relates to a potential mistake you have made while delivering your professional advice and services, there may be grounds for legal action to be taken against you. Professional Indemnity insurance acts as a safeguard to protect your assets and your reputation.
Protecting your professional reputation
A lot goes in to building your small business and its professional reputation. The scary reality is that it only takes a small mistake or misinterpretation of advice for a claim to be made against your business. This could potentially spell disaster, costing your business both professionally and financially.
This is when having the right Professional Indemnity insurance cover can help you stay in business for the long run, providing financial protection when your business needs it most.
Whether the allegation is real or alleged, your Professional Indemnity insurance policy is there to protect your business’s finances, your reputation, and personal assets too. With cover that allows you to get back to work quicker without having to stress about the damage it may cause to your business.
When it comes to the risk of a claim being made against your business, your level of skill or professionalism isn’t a determining factor. There is always the risk of an unhappy client making a claim against you, something which is out of your control.
Professional Indemnity insurance enables you to defend your reputation through the right legal avenues, to ensure your business’s name is clear, while adding value to your business in the long run.
The cost of litigation
One of the common mistakes small businesses make is underestimating the actual expenses involved with the cost of legal action. In some cases, the defence fees can cost up to $100,000, an amount which many small businesses may struggle to afford.
A claim could happen to any business, and no matter how qualified you are or how much care you take, mistakes can still happen or worse, a client may believe you have made one.
The process of defending a claim is not only expensive but it’s also time-consuming, with a potentially devastating impact on your business. This is where Professional Indemnity insurance can help protect your business in the long run.