What is Professional Indemnity Insurance and Do I Need It?

What is it? 

Are you a professional such as Doctor, Lawyer, Architect or chartered accountant?

Have you ever thought about what would be the consequence of your bad decision? Suppose you have made a plan for the building and the building collapsed after a few days, don’t you think you would be held liable if your plan or design was not correct.

In this case your client could drag you to the court for your negligence in providing the services and would ask you to pay the losses.

Do you have the capacity to pay for the loss??

One such claim would be enough to wipe out your entire assets and savings if you are not properly insured.

Professional indemnity insurance can come to your reduce in such cases. 

Professional indemnity insurance is a type of liability insurance policy which covers the liabilities of the professionals arising out of their work. Liability is the responsibility to make good of the other party. Professional indemnity insurance is offered and taken mostly by the professionals such as doctors, lawyers, architects, engineers, chartered accountants and other professionals providing advice or services.

What is covered? 

The professional indemnity policy covers a wide range of scenarios as explained below:-

  • Professional negligence
  • Unintentional breach of copyright or confidentiality.
  • Defamation and libel
  • Claim costs

The defamation and libel would also be covered under the professional indemnity policy if it is unintentional. The most hyped example for this is the Amber Heard and Johnny Depp’s case where the court awarded in favour of Johnny Depp for defamation. Now Amber Heard can either pay the amount from her pocket or her insurance company would pay if she had taken an indemnity policy.

The professional indemnity policy would basically pay the claim costs to the insured customer to fight the court cases or may negotiate with the other party for an out of court settlement. The policy covers only the civil liability claims where any claims arising out of criminal or unlawful activities would not be covered under the policy. 

Need for PI:- 

The professional indemnity policies are gaining traction in India as professionals are being held liable for the deficiency in their services. There are many instances where doctors have misplaced certain objects in the stomach of patients which resulted in their death or suffering. The patients can sue the doctor for negligence while providing services and this would be covered under the professional indemnity policy. The same way lawyers can be sued if they lose a case and if the client thinks this is due to negligence on the part of the lawyer.

These policies are gaining importance as people are realising the value of insurance. Most of the professionals are going for a professional indemnity insurance policy to cover their professions from court cases and other litigations.

For more details on professional indemnity policy please book a call with our experts in Ethika insurance broking company in India.

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