Professional indemnity is the mechanism that has been introduced to protect professionals such as doctors, lawyers, engineers, accountants, architects, etc., and the institutions such as the firms employing professionals against the claims made by their clients during the time period of their contract. This type of coverage is generally applicable to professionals who provide advise on various subject matters on which they are experts.
On what grounds can a third party bring an allegation that will be covered by professional indemnity?
Not all allegations of your clients against you will entitle you to protection under a professional indemnity cover.
For example, assume that you are a lawyer and a client was meeting you for advise at your office. As a custom you offer him coffee and the attendant who was pouring coffee accidently spills hot liquid on your client’s hand. It is true that the client came to meet you in your office and it was the fault of your employee but, as pouring coffee is not the normal course of your business the loss arising from the fault of your employee is not covered by professional indemnity policy.
Thus, you can see that the loss should arise out of your normal course of business. Therefore, acts such as professional negligence, loss or damages to documents, unintentional infringement of intellectual property and slander are some of the things that can be covered by a professional indemnity policy if such a claim was made against you by a client. In simple words, any act, error or omission by you or one of your staff in their professional capacity will be covered.
Similarly, there are also school liability insurance coverage that will specifically cover the educational institutes against the claims made by students, parents of students and teachers making the lives of the management easy.
Who should get professional indemnity covers?
As was said in the beginning people who are engaged in professions that are recognized as vocations that will give the practitioners expert knowledge about the area they practice in are entitled to obtain this type of covers.
It is imperative that you understand what type of cover you need as you may not get the expected benefits if you chose the wrong one. If you are a merchant and you ship goods to distributors in other countries, a professional indemnity cover will not pay for damages to goods during transit; you should have got cargo insurance.
When should you get a professional indemnity cover?
No matter how good your relationship is with your clients, there is a risk of allegations being made against you as long as you are in the business of providing professional advice and expert services. Therefore, it is always a good idea to get a cover irrespective of whether you are new to the filed or if you have a whole lot of experience.
Another benefit of having a professional indemnity cover is that the insurer will, in most cases, provide legal support as well. Unless you are a lawyer yourself, this can take a huge burden off your shoulders.