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Professional
indemnity is the liability that a company can come under if there is a
litigious claim made against it.What
this means is that if your company is being sued by a particular client
or customer then your insurance policy will most likely protect you
against such a claim.
The way it works is that if a customer or client is not happy with your
products or services then there is the risk they may sue either you or
your company.
This is not to say that every customer will want to sue you, however if
for example you give misleading advice and a client undergoes hardship
because of the advice then they may be in a position to actively sue
you or your company.
As today's society is becoming more litigious it is important to look
at the risk of being sued. The reason for this is that every day more
people are being sued for the services they offer their clients. If you
are working in a profession where the risk of being sued is relatively
high then it is most likely that you should look at getting insurance
for the professional services that you offer your customers and clients.
However, if you decide the risk of being sued is relatively low then
you may choose not to take out professional indemnity insurance for the
services you offer your clients. The reason for this is that you will
have to pay a premium to the insurance companies to take out such
insurance.
Obviously it is up to you to look at the risk you have in the services
you offer your clients and then weigh up the pro's and con's of taking
out indemnity insurance. If you feel there is a relatively large risk
of being sued then you should most likely look at taking out
professional indemnity insurance.
The reason for this is that there is an associated cost attached to
getting professional insurance and depending on your risk levels this
cost could be quite high. That is because insurance companies look at
the likelihood of you being sued in the services you offer. If your
professional services are in a high risk area then the premium that you
pay the insurance company will more likely than not be higher.
For example, if you are in the legal profession and you are giving
advice to your clients then you will be at a relatively high level of
risk of a claim coming back at you for such services.
However, if you are working in a relatively low risk profession such as
lawn mowing then your insurance premium's will also be lower than in a
high risk environment. The reason for this is that the insurance
companies typically undertake a benefit cost ratio analysis on
particular professions. If there is a low risk of being sued in a
particular profession then the insurance premiums are usually lower as
there is less risk to the insurance company providing the protection.
When you are looking at the various insurance policies it is important
that you become aware of what is both included and excluded from the
policy documents. These are known as inclusions and exclusions and will
effect the premium that you pay.
The reason for this is that different insurance companies will cover
certain particulars whereas other insurance companies will exclude such
particulars. That is why it is critical that you are fully aware of the
terms and conditions of the policy documents that you are wanting to be
protected by.
If you are unsure of what you would like to be covered for and what you
would like to be excluded for then it is prudent to contact a
professional indemnity insurance broker and set up a meeting with them.
These insurance brokers will usually know exactly what is included and
what is excluded from each policy document.
The reason for this is that pi insurance brokers will usually have
their finger on the pulse of what inclusions and exclusions each
particular insurance company will offer their clients. That is because
they are looking through and studying policy documents every day that
they are working.
Obviously the insurance brokers will add their own premium onto the
services they offer, however it will save you the time of going around
to each individual insurance company and sourcing the particulars of
each policy document.
If you are wanting to save yourself the time of contacting individual
insurance companies and looking through the policy documents then you
should consider contacting an insurance broker. It is for this reason
that you should consider approaching a number of insurance brokers and
determining which policy you will take out.
This is usually the most time efficient way of getting professional
indemnity insurance for the services you offer your customers and
clients.
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