Professional Indemnity Insurance - Advantages and Limitations
Professional indemnity insurance (PII) is a liability insurance and protects your business when there is claim for compensation due to any loss (financial/image damage) as a result of your professional negligence. Earlier accountants, surveyors, engineers, solicitors and architects were the major buyers of these insurance policies. However, the changed definition and dynamics of professionals now necessitated the demand for PII among people engaged in other sectors. Professional is a skilled human being capable of offering specialized advice and service. So, IT consultants, designers, doctors, artists, photographers, marketing and management consultants are now taking the help of PII cover to protect their professional interest.
When professional indemnity can help?
The professional indemnity insurance can offer you protection (only if the claim is made) in the following situations.
- If there is any negligence or breach of contract on your part
- If your unintentional infringement of intellectual property right causes a damage to the client
- Any sort of liable or slander
- Loss of the data provided by the client
- If any of your employees is found guilty is misappropriation of the clients’ money
Limitations of professional indemnity insurance policies
Professional Indemnity insurance does not offer you coverage against the claims above agreed amount, demand for compensation after the policy tenure (if not renewed) and specific vetoed activities. They do not protect you against any sort of environmental and pollution claims. Some of the insurers also do not offer coverage for overseas work. Another shortcoming of professional indemnity insurance policies are that they are for a specified period only and not for life. You never know when the client will file for compensation. If the client faces any problem after the expiry of the policy and files for compensation, you land in the problematic zone. In this regard long term professional indemnity insurance policies (if you can afford) should be given preference.
|
