Professional Indemnity insurance: The more you know

Damage doesn’t always have to be physical. Sometimes, it affects the finances and stature of a person. Seldom does one think it will happen to them, but all it takes is one little mistake. Professional Indemnity Insurance, also known as Professional Liability Insurance, is an additional liability insurance policy for specific professions. It is a policy that protects professionals from faults caused by miscalculations on their behalf. It is more of a protection if a client sues you declaring your service was harmful to them financially.  

Indemnity enforces that the insured will be back to its financial status, right before the loss occurred. Meaning after the insured face losses, the coverage reimburses the insureds to their original state financially.

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Who are the ones that need Indemnity Insurance?

Without Professional Indemnity Insurance (PII), a business is vulnerable when it comes to third party claims. Professional Indemnity Insurance provides security from such claims. 

Medical malpractice insurance is the most common type of PII insurance. A study by John Hopkins University shows that 250,000 people die every year from medical negligence. People who involve in medical practice carry a risk. One error or negligence can enforce their clients to sue them. Hence, these medical associates want to get insurance assuming the worst-case scenario.

People who are involved with financial and legal services are also the ones who carry indemnity insurance. Advisers who provide one with counsel on legal and economic benefits to their clients might face charges. When dispensing legal or financial aid, they are liable for negligence.

For example, accountants may face penalties from their clients regarding faulty advice on their finances. Let’s say you present a bit of help to a client on their taxes. Due to inadequate performance, they suffered a penalty. Now, even with goodwill, the accountant is held responsible. They face those charges because the client acted on their advice and suffered financial loss. So, what can they do to avoid these scenarios?

They can get Errors and Omissions Insurance

With Professional Indemnity Insurance, they protect themselves and their practice from these threats.

 

What affects the premium of Professional liability insurance?  

Like any other insurance, the basics are the market competition and the type of coverage. Besides that, the premium you charge will also be affected by these factors.  

  • Business location  
  • Business size
  • Previous claims  
  • Years of service  

The takeaway 

Times are changing, and so are professions. An individual or a firm that provides advice or legal services, referred to as “Professionals” has increased its market drastically.

These professionals are likely to face charges of negligence, errors, and omissions, or whatnot. Even high-ranking officials of a company want a shield to protect them. Similarly, medical associates are prone to malpractice suits and want coverage against a claim from their patients. As a result, they are your primary focus. The market they provide is hard to miss.

Even as an insurance agent, they might face charges considering common E&O claims. So, it’s better to let your client know about different coverage options.

But you should never limit yourself to a specific class. People and business owners of all sorts are always looking for a way to avoid being sued. Their trade might not require it, but they are willing to purchase insurance just in case.

You, as an agent, must provide these services to your clients. Additionally, you need to make them aware of the lawsuits they might face.

Professional Indemnity Insurance is a vast and growing sector. Since it covers human errors and misjudgments in business, the threat of getting sued over distortion is covered.

What are your thoughts? Let us know in the comments below.

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