Professional indemnity insurance is a type of insurance that protects professionals against litigation from customers. This mostly happens in a service industry where customers may not be pleased with your service and as a result sue you. Therefore, this insurance will cover your business from losing money in a situation whereby customers decide to act otherwise.
This insurance will also cover dishonesty, loss of customer data, damage or any defamation and legal actions against a professional service provider.
While deciding to take this insurance coverage, there are certain questions which you need to ask yourself in order to ensure you are fully aware of what you are doing. These five questions are as explained below:
1. What is Professional Indemnity Insurance
This question will form the foundation for other questions to follow after this.
One cannot simply buy insurance without understanding the general information about the policy. Once you understand the basics of what it means, then it becomes easier to make a thorough analysis on which insurer meet your needs.
2. Does My Profession/Business Require PI Insurance?
This type of insurance covers a business that gives services to customers. So if you are in a consultancy or any type of service business, then you might need this insurance coverage.
Although it is voluntary in most professionals, it is mandatory in critical and technical professions such as accounting and architecture, where you may be liable for mistakes.
3. What Protection and Benefits Will I Get From Taking PI Insurance?
If you are found liable for neglect and failing to meet customer needs, then this policy will benefit you immensely.
Such benefits include:
- You are covered in the event that you made a professional mistake.
- The insurance coverage will take care of legal fees and representation that you might need.
- In the event of a litigation loss, the insurance will cover any loss or damages that the client incurred.
- In case you lose customer documents, then this policy will be helpful.
- More complex PI covers will not only cover the top officials in a company but also employees within the same organization.
4. How Much of PI Cover Will I Need?
The amount of coverage one will need will be determined by the industry they work in and the type of clients they deal with. Big contract service providers will obviously carry more risk when compared to relatively small professional contracts.
As a result, this will determine the amount you will have to pay for insurance coverage.
5. What Should I Look Out For to Get the Best Possible Deal?
There are multiple providers for this type of insurance and this may lead to confusion on which one to choose.
However, there are key aspects you should consider before making a decision.
- Can the policy provider tailor the policy to suit your specific need so as to avoid paying for unnecessary coverage you might not require.
- New professionals should also find out whether there are monthly payments instead of paying huge sums up front.
- One should also research the reviews and reputation of the insurer.