Professional Indemnity Insurance protects you from an expensive loss when your client decides to invoke a legal claim on your business for lack of satisfaction of goods or services provided. It is a secured way of apportioning a fixed amount to pay your customers in the event of damages. It protects both the business and client when expensive mistakes occur.
Who would need a professional indemnity insurance
- Corporate bodies
- Small Scale Businesses
- Manufacturing Companies
- Legal firms
- Financial service advisers
Why do you need a professional indemnity insurance
To Protect the Company’s Reputation- The existence of Professional Indemnity Insurance covers errors, omissions and negligence of the company. These mistakes are often too costly and may have the potential to mar the company’s reputation. The company can allocate a certain amount to this insurance plan to salvage this situation before it gets out of hand.
To Prevent Scandals-. A rapid response prevents further scandals which may have the potential of making the news. It reduces the possibility of turning business allies into rivals. Professional Insurance plan makes possible the immediate compensation of affected clients without long meetings with the board of directors to analyze the damage level and insurance to be paid.
Increases Trust among Clients- Some clients are keen on knowing if a company has Professional Indemnity Insurance before any business transaction takes place. Having this makes them feel assured that the company is futuristic, responsible and has their best interest at heart. They know for sure that when a crisis occurs, the company is ready.
Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.
Most professionals are required to have this agreement to protect their reputation and finances.
Ways professional indemnity can protect your business
Let’s look at the various ways indemnity insurance protects you or your business.
- As a legal professional, you’re liable to be accused of negligence or inadequate performance by your client due to a piece of legal advice gone wrong. Insurance indemnity protects you from overcompensating and ensures that due process is followed to completion.
- Business owners or executives require Professional liability insurance which protects them against negligence claims due to damages that result from errors, poor performance or failure to perform. Professional liability insurance is also referred to as errors and omissions insurance.
- Medical practitioners are required to own malpractice insurance. This is a form of indemnity insurance that protects medical practitioners from negligence claims which resulted in physical or mental harm to patients.
- If your organization is in the business of manufacturing products for sale, then a product liability insurance is what you need. This insurance protects you against lawsuits due to harm caused by any of your products.
In the financial industry, an investment professional who provides financial advice that results in the purchase of investment products or tax must require an Errors and Omission insurance. This ensures that they are protected when their client makes negligence claims due to poor investment advice that led to reduced profit or severe losses.
However, as a company owner, you have to be ready for the good, bad and ugly. Professional Indemnity gives you confidence in the event of huge errors that lead to losses.