What is professional indemnity insurance and do you need it?

Professional indemnity insurance is designed for people who provide a service or advice to

clients and is there to protect professionals should they ever be sued for negligence, injury or

financial loss as a result.

The cover ensures professionals can defend their business from financial loss resulting from a

legal suit. Claims are variously referred to as malpractice, professional misconduct or breach of

duty and insurance cover usually includes legal defence costs and damages payable.

Professionals are often considered to be experts in their field and clients may rely on their

expertise. This means that professionals have a duty of care. If they breach this duty the affected

parties can claim damages against them - even if their advice was given free of charge or to

parties outside of a contract.

If you own a business, you may be held accountable for your own actions, and also for those of

your partners, employees or volunteers.

Today, proof of professional indemnity insurance is a requirement for many contracts – both

government and private. It may also be a legal requirement for some professionals to trade, for

example medical and legal practitioners.

Professional indemnity insurance is different to other general liability insurances and there are

various legal claims associated with professional services which are not covered by other

policies. These include:

negligence

failure to act or advise client

misrepresentation

violation of good faith or unfair dealing

provision of inaccurate advice

acting without proper instruction or failure to act in accordance with client’s instructions.

In an increasingly litigious world, professional indemnity insurance is a necessity, not a luxury.

With increased levels of responsibility and accountability falling on professionals, it’s important

that you make sure you and your business are protected against legal liability, arising from your

professional service & or advice, and the threat of litigation which is time-consuming, expensive

and potentially damaging to your reputation.

Policies vary greatly and there are a number of things to assess when looking for professional

indemnity insurance. Consider:

The industry you are in and the different kinds of risk to which you are exposed.

What aspects of your work could result in claims being lodged against you

Who in your business needs to be covered, for example, the principal, directors and

officers, partners, employees, management committee members, volunteers or trustees.

What level of cover does your business need? Does your industry or contracts set a

minimum?

What other covers might you need? For example, product liability, public liability,

defamation or statutory liability.

Professional indemnity insurance is an essential component of risk management for any

individual or business involved in the professional services industry.

In order to determine which policy is best, you need to understand the risks associated with the

professional service you provide. EBM Insurance Brokers has been helping businesses in the

professional services industry to identify risks and determine the best ways to manage risks for

years.

Talk to an EBM professional services expert today. With an understanding of your business and

the unique risks you face, EBM can help you determine the cover you need and tailor policies to

suit. That leaves you free to concentrate on running your business without worrying about the

‘what ifs’ when things don’t go to plan.

To find out more about Professional Indemnity Insurance and other liability risks, contact us.

The above advice is general advice and has not taken into account your personal circumstances,

be sure to read the appropriate Product Disclosure Statement to ensure the policy meets your

individual circumstances.