Professional Indemnity Insurance

Professional Indemnity Insurance, also known as professional liability insurance, protects professionals whose job it is to give advice and services which are used to defend people against others. This insurance coverage covers any errors and omissions made on the part of a defence in a court of law. This form of insurance covers people in such professions as law, consultants, brokers and accounting.

Professional indemnity insurance exists in other forms for other professions, such as doctors, who have this insurance but call it malpractice insurance. The idea is that even though you are a professional giving your sound professional advice on a matter or case, there are always unforeseen circumstances which may prove you wrong. In the event of these circumstances, you would want to be covered for your client’s loss if they decide to pursue a court claim against you.

The rationale of this insurance is simple; it covers negligence, misrepresentation, violation of good faith and fair dealing. Usually it is the negligence and misrepresentation which are called into question with this insurance. The policy will only cover claims made during the policy period, so like any other form of insurance you will need to keep your payments up to date. The coverage also lasts as long as the policyholder is in the business of providing covered services or products.

This policy is also limited to and does not include criminal prosecution or legal liability under civil law. So a need for this policy to be called upon will be very rare in most cases. Even products as mentioned earlier are covered in this. One such example is that of a computer program and software. If the software malfunctions is can cause all manner of liability damage such as physical and financial damage from loss of income and sales. This can possibly fall under misrepresentation of the software in general. This makes Professional Indemnity Insurance such a well rounded necessity.

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