Professional indemnity insurance explained

September 23, 2010 · Filed Under Professional indemnity insurance 

Professional indemnity insurance provides protection in respect of any legal liability claim against your livelihood such as third party injury; loss of data or documents; employee dishonestly; breach of duty or negligence; negligent misstatements; intellectual property rights; and defamation etc. (Do note that these are typical benefits offered by a policy – some providers may not offer all of these elements of coverage, so do check).

Professional indemnity cover can be legal requirement of some trade bodies. However, it is important that you choose the most suitable policy with which to protect your company and do not accept the first one you see. Shopping around for cover and comparing policy features and benefits on a like-for-like basis may be key to finding that suitable deal.

What does it do?
This type of insurance may help your business to overcome unexpected hurdles and minimise any financial loss – as well as the undoubted stress you will personally face – in the event of a claim made against it.


  • when purchasing your insurance, bear in mind that as with most insurance cover, typically you will have to pay an excess on your cover. This is the first part of any successful claim that you will be liable to pay and will typically depend on what professional indemnity insurance product you have as well as the sum insured;
  • the terms and conditions of the insurance can differ depending on the providers. Therefore, always ensure that you check them to confirm the pertinent points of the cover and to ensure that it is the most suitable product for you.

Before you buy your cover, do double check that the policy gives you everything you need – look at the sum insured; excesses; policy exclusions; terms and conditions; and how long the insurance must be in force for before you are entitled to make a claim.

Still not sure?
Many businesses would go under when faced with a claim against them for damages or negligence. A professional indemnity insurance policy may help take away the stress and provide financial assistance with legal and compensation costs, up to set limits of course.

Even the most respectable of businesses could be faced with a claim against it by a dissatisfied customer. Having professional indemnity insurance in place may help protect you and your company.

Of course, there are some common sense ways that you can lessen the risk of someone making a claim against you. For example, by documenting everything beforehand, such as responsibilities and expectations, you can manage the workload and the relationship – hopefully before any problems arise.

But while this may make good business sense, you cannot plan for eventuality and that is why having professional indemnity insurance in place may be a good idea.


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