What is Professional Indemnity Insurance?

For many professional practitioners, it is mandatory for them to be covered by Professional Indemnity Insurance; they include advisors such as those associated with legal issues, finance, insurance, and architects, among others. Consultants in many and varied fields of specialised expertise invest in the protection afforded by this type of insurance. However, for some, the question remains of why it is needed and exactly what is professional indemnity insurance?

In this day and age of legal actions for almost any and everything, it has become increasingly necessary for any professional to be protected against claims being made against them. This may relate to loss or damage occasioned by actions or advice given relative to a client or a third party, which is viewed as being of a negligent nature. Should it be determined that you have been fully or partially negligent in the service you provided, it could mean a substantial sum being awarded to the claimant.

Professional Indemnity Insurance is a protection against claims such as these, with the added advantage of your legal costs also being covered. However, a critical factor for those considering this type of insurance and the aspects of what is professional indemnity insurance, is that claims are only be covered by a policy, if it is in effect.

Accordingly, it could be advisable to consult your broker, or insurance provider, regarding the various aspects relating to your particular needs. This would apply if you are considering cancelling an existing policy because of retirement from your practice. It would involve extending the policy term for a determined period. It is a factor that could also be applicable if you are changing your insurance provider and, whether they would accept claims for pre-policy claims!

For any practitioner, who could be susceptible to claims of this nature; it is a crucial part of their consulting process that they detail fully and particulars that are relevant to a specific project, client or patient. This reduces the potential for claims against you and ensures that all pertinent terms and conditions related to any agreement are clearly defined.

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