What is Professional Indemnity Insurance?
Professional Indemnity Insurance is a commercial liability policy that protects your business from lawsuits arising from an alleged breach of professional duty of care, errors and omissions, defamation, negligence, and more. It functions as a safety net if you or your employees make a mistake while performing the job.
Learn more of the benefits below:
Indemnity for any sum
Direct consequences of any negligent act
Any errors or omissions
Pay for the expenses incurred in the defence
FAQs - Professional Indemnity
What You Need To Know About Professional Indemnity Insurance?
Professional Indemnity Insurance is essential for entrepreneurs who operate a professional service business. In particular, this type of insurance is an industry standard for IT professionals, Marketing & Business consultants, Accountants, Designers, Recruitment agencies, and more.
While businesses strive to perform their duties to the best of their abilities, mistakes can happen. In such circumstances, your client can file a civil lawsuit against your company demanding compensation. With a Professional Indemnity policy, you do not have to worry about the lawyer fee or legal damages, as this type of insurance can safeguard your business against expensive litigation.
What Does Professional Indemnity Insurance Cover?
As an insurance company that has been serving SMEs and startup companies in Singapore for years, we are always dedicated to sharing helpful information to help our current and future clients. If you wish to understand the benefits of having professional indemnity insurance, it is crucial to learn when you can use this kind of insurance.
In most cases, Professional Indemnity Insurance coverage protects your business against third-party complaints pertaining to the damages your services had incurred on them or their properties or complaints from your clients about ineffective services or damages to their properties caused by a failed service.
Common examples of professional indemnity insurance coverage include:
1) Any alleged breach of duty
A breach of duty occurs when a business’s conduct fails to meet the applicable standard of care. For example, an accounting firm making a mistake that results in a company underreporting its taxes constitutes a breach of duty.
2) Breach of Confidentiality
Disclosing confidential information pertaining to your clients without their expressed consent constitutes a breach of confidentiality and can expose your company to a liability lawsuit.
3) Defamation or Libel
Libel refers to the publication of false statements that damages a person’s or company’s reputation. If the statement is not retracted, the business risks a slander lawsuit.
4) Error and omission/Negligence/Malpractice
Similar to a breach of duty, claims of negligence and malpractice can be brought against companies that fail to perform their services to the standard expected of them or if an error occurs as a result of negligence.
5) IP/Patent Infringement
Companies that utilize an IP or patent without permission from the rights-holder are committing IP/patent infringement. The relevant authorities can file a lawsuit against those responsible for the violation.
What does Professional Indemnity insurance not cover?
Professional Indemnity Insurance protects professional advice- and service-providing individuals and companies from financial loss in case of negligence claims made by a client. However, professional indemnity insurance has significant exclusions including the reputational damage that the mistakes have caused.
- Asbestos exclusion
- Computer virus exclusion
- Excludes any claims or circumstances that may lead to a claim if you were aware of them before the start of the period of insurance
- Excludes any employment related claim
- Excludes any fines, penalties or punitive damages identified separately by the court
- Excludes claims brought from or in the United States of America or Canada
- Excludes claims from parties who have a financial or controlling interest in you or who are covered by this policy
- Excludes dishonest or fraudulent act or omission by a director, partner or principal
- Excludes management of financial transactions via the internet, or obscene, blasphemous or pornographic material on the internet
- Excludes the excess shown on the policy schedule for each and every claim
- Financial services exclusion
- Insolvency exclusion
- Onerous contracts exclusion
- Property damage exclusion (unless it arises from a breach of professional duty)
- Recall costs exclusion
- Terrorist act exclusion
- Third party deliverables exclusion
- You must duplicate/back up any electronic data or information on at least a daily basis
What You Should Know About Professional Indemnity Insurance Deductible?
It is crucial to understand what Professional Indemnity Insurance Deductible is before purchasing your business insurance. While this may appear to be a basic concept, it has a significant impact on the insurance quotation or when you submit an insurance claim.
First, it is necessary to define what professional indemnity insurance deductible is. A deductible is an amount an insured must first pay for each claim before the insurance provider can provide compensation on the insured's behalf. An insurance policy's deductible is usually presented in the terms and conditions of your contract.
Small businesses frequently have low or non-applicable deductibles. So when a claim occurs, the insured would not be responsible for paying a deductible on the settlement or any claims expenditures. However, when your company expands, your Professional Indemnity Insurance deductible also increases. This is why SMEs and start-up companies are encouraged to get Professional Indemnity Insurance, as it will add credibility to their companies without worrying about high deductibles.
What Is The Role Of An Insurance Broker/ Agency?
A broker’s role is to serve your company’s best interests. They help you assess your business risks, goals, and coverage requirements before working with their insurance partners to determine the ideal policies that best suit your needs.
They also save you the hassle associated with claim submissions. A reliable broker utilizes their relationship with their insurance partners to facilitate a smooth settlement process. You can rest easy knowing that you will receive a speedy and fair resolution when you submit a claim.
Even Insurance Brokers Need Professional Indemnity Insurance Too
Brokers, like other businesses that provide professional services, also require insurance to cover their businesses. This is what a Brokers Professional Indemnity Insurance is for. This insurance is designed primarily for brokers that connect insurance firms with potential customers.
Brokers' Professional Indemnity Insurance can offer insurance brokers the best protection for their professional indemnity concerns. As this insurance is designed specifically for an insurance broker, it can safeguard the business from regulatory violations and accusations of malpractice. Since brokerage firms are not direct providers of the products or services, brokers' professional indemnity insurance policies are specifically designed to cater to their business specifications.
How to switch insurance if I'm already covered?
Switching a policy providers at the time of renewal, that is when your current insurance is near expiration, is straightforward. However, it's important to maintain the continuity of coverage while switching insurance providers. Our team at BLACAZ. is always eager to assist you, so get in touch if you have any concerns.