Entrepreneurs and professionals can find themselves in difficult financial positions if allegations and claims are made against them and they do not have professional indemnity insurance. If legal action is taken against professionals and compensation is needed, it would ruin their profession. For this reason, it is important to have professional indemnity insurance. Some of the insurance professional indemnity available include:
- Professional indemnity insurance for physiotherapists
- Professional indemnity insurance for nurses UK
- Cheap professional indemnity insurance for contractors
- Professional indemnity insurance for interior designers
Professional Indemnity Insurance Definition UK
To define professional indemnity insurance; it is a risk management cover that protects professionals from a financial situation and reputation in case legal action is taken against them. As such, the policy covers beneficiaries against legal fees and compensation costs if they are sued.
Professional indemnity insurance is important in the following scenarios:
- Professional negligence
- Breach of confidentiality
- Defamation and libel
- Loss of money that you are responsible for
- Loss of data
Is Professional Indemnity Insurance Compulsory?
Some professions and associations require one to have professional indemnity insurance. People in such professions will need to purchase one. This is because some professions are prone to errors leading to claims. For instance, a nurse in the UK would need indemnity insurance for nurses UK. You need to check with your professional body on operational guidelines.
However, it is not a legal requirement to have one. Businesses do not need to buy business indemnity insurance. However, if you are in a highly risky business, you can consider purchasing one.
When Do I need Professional Indemnity Insurance?
You may need professional indemnity insurance in the following scenarios.
- When offering expert services. Sometimes you are likely to make mistakes and miscalculations.
- When in a business that handles client's information. You pose a risk of infringement of a person's legal rights through accidental disclosure of his data. As such you must get business indemnity insurance.
- When offering consultancy services. Blunders can occur as a result of the advice you gave to a client.
- When a client requires you to take indemnity insurance before commencing work.
- Where your professional body requires that you must have professional indemnity insurance.
Professions that Require Professional Indemnity Insurance
There are many professionals that require professional indemnity insurance. The following are some of the professions.
- Business consultants
- Surveyors Interiors designers
- Design and construction professions
- Town planning officials
- Risk managements exerts
- Education and training personnel
Process of Making a Professional Indemnity Claim
- Notification. The first step to benefiting from your professional indemnity cover is to notify the insurer in case there is a claim leveled against you or a scenario that is likely to trigger such a claim. You can always talk to your insurance broker for advice on whether you should notify the insurer about a particular situation.
- Pre-action stage. The insurer will request you to present detailed information regarding the situation in order to evaluate the claim comprehensively. You may also be asked to offer your views on whether you are liable as well as an estimated value of the loss claimed by the client. At this point, you are likely to receive a pre-action protocol letter of claim. Ensure that you follow the embedded procedures. However, there is no need to worry since your insurer will guide you throughout the entire process. An expert like a lawyer will be appointed by the insurer to guide you in the process where necessary.
- Call for negotiations. It is possible to use a formal form of alternative dispute resolution to solve any arising disputes. The advantage of this approach is that you will reduce the incurred costs when finding a solution that will suit both parties. Even if you are adamant that the claimant's assertions are unreasonable, it is important to evaluate the risks of going forward with the case in a court of law. Ultimately, the expenses and time it will take to settle the claim in the latter setup may render the whole process irrational.
- Litigation stage. If the claim isn't settled at the pre-action stage or through an alternative dispute resolution approach, the matter will now be subject to litigation. The insurer will select a solicitor who will advise them and you accordingly.
Professional Indemnity Insurers
The following are some professional indemnity insurers that you need to consider:
Nature of Professional Indemnity Insurance
Professional indemnity insurance is either obligatory or voluntary. Indemnity insurance voluntary is for those professionals who are advised to take PI policies like designers, physiotherapists, architects and fitness trainers. The reason why it is important to get one is because legal action can be taken even 6 years after an incident occurred. As such, you need to look for professional indemnity insurers with run-off cover knowledge.
The other nature of professional indemnity insurance is the indemnity insurance obligatory. In this one, professionals are instructed to take a PI policy. Some professionals provide their professionals with the PI policies, while in others, one must to purchase. For example, in the UK, solicitors are advised to have PI policies.
Professional Indemnity Insurance Cost UK
It is important to have professional indemnity insurance information. That way, you will be aware of the coverage and the cost of indemnity insurance. The cost of professional indemnity insurance differs from one insurer to the other. To get cheap public liability and professional indemnity insurance, you need to shop around and get the best quotes. Then carry out professional indemnity insurance price comparison from professional indemnity insurers with the best rates.
Various professions have different magnitude mistakes and errors when working for a client. This could result in a legal claim. However, having professional indemnity insurance protects one against financial loss in such scenarios.