Do you provide advice, you may need Professional Indemnity Insurance - What you need to know
Do you or your business provide any type of paid or unpaid advice to the customers? Whether you’re an IT Consultant, Wholesaler providing advice in respect to sales or an Allied Health professional, you are likely to need a special type of liability insurance, called Professional Indemnity Insurance. This insurance will pay legal costs to defend an actual or alleged negligent professional act, error or omission, as well as any damages awarded by a court. It’s not just lawyers, doctors and accountants that people can allege have caused them a financial loss, it can be an electrician, teachers, web designers, fitness trainers and a host of other people who provide services or advice.
You may already have other business insurance, including Public Liability and Product Liability Insurance, which cover types of insurance cover your business for personal injury or third-party damage as a result of your business activities.
Professional indemnity insurance covers financial losses caused to a customer due to them relying on negligent professional advice. A professional can be anyone that is a specialist, expert or person with years of experience, that provides advice to customers.
Without Professional Indemnity Insurance, you or your business could be faced with significant legal and other expenses to defend an actual or alleged mistake, even if you can successfully defend the legal action.
So, let’s take a look at what Professional Indemnity Insurance actually covers, who can benefit from this type of insurance and what it can do for your business.
What does Professional Indemnity Insurance cover?
Claims of negligence, malpractice or misconduct are covered under your Professional Indemnity Insurance. Extensions to cover can include defamation, IP infringements, breach of consumer and fair-trading laws, fraud and dishonesty, fidelity, PR costs and inquiry costs.
All policies cover legal costs to defend, investigate and amounts to settle the claim (if necessary) arising from your professional activities.
Who can benefit from Professional Indemnity Insurance?
Professional Indemnity Insurance is mandatory for some professionals, including health professionals, lawyers and accountants. However, it’s relevant to anyone who sells a service or provides advice based on their expertise in industries including, construction to transportation, manufacturing, tourism and IT.
For a business, the firm usually takes out the professional indemnity insurance, with consultants, freelancers and even the self-employed professionals usually purchasing their own professional indemnity insurance.
How can your business benefit from Professional Indemnity Insurance?
Anyone who believes (rightly or wrongly) that they have been financially harmed by your advice can take legal action.
Sometimes employees make mistakes or advice is given without full knowledge or understanding of the customers situation or procedures and training are overlooked. A beautician could apply a laser treatment without being properly trained, causing permanent scarring or an IT professional could provide a software update that causes an online retailer’s site to crash for a period of time. These are some examples of real problems that are often in the news.
There are many residential towers in NSW & Victoria that have flammable cladding installed, which are currently having this removed at great expense or social media sites now liable for defamatory content that their users post.
Some allegations may be unfounded, while others like poor engineering related to the choice of installing flammable cladding, raise potentially life-threatening issues. Without adequate Professional indemnity, the costs can be financially crippling and your business reputation damaged.
Speak to a professional insurance adviser
Since no two businesses are alike, your Professional Indemnity Insurance needs to be tailored to your industry and specific business needs. Therefore, we recommend that you speak to a specialist insurance adviser who can help you to understand the cover available and any options recommended to provide financial protection for you and your business.
For help selecting the right type of Professional Indemnity Insurance for your business, talk to an insurance professional today and find your local adviser.
This article originally appeared on Insurance Advisernet News and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Insurance Advisernet.