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Professional indemnity insurance protects professionals against claims of negligence made against them by a client. This type of insurance is available to professionals across a range of industries and covers the costs and expenses of defending a legal claim, as well as any damages payable.
Professionals are legally held to a higher degree of skill and care than ordinary people. If others suffer a loss that can be attributed to a specialist's failure to uphold professional standards, they risk being sued for a breach of professional duty. A client's loss may be material, financial or physical.
The definition of 'professional' has broadened in recent years. Due to this, professional indemnity insurance is now held by workers across a wide range of industries. Any professional person providing services is regarded by their client as an expert and is therefore open to a claim being made against them.
Professional liability insurance was once associated mainly with such groups as accountants, solicitors, medical workers and engineers. Currently however, it provides protection for advice and treatment provided by professionals in many industries, including architects and designers, education workers, real estate agents, health workers and consultants.
Although generally a voluntary form of insurance, certain professionals, including insurance brokers, legal professionals, medical practitioners and some accountants, are required to hold professional liability insurance. Professional contractors often need to hold professional indemnity insurance if working with government bodies, local authorities or private consulting firms.
The professional indemnity policies and conditions relevant to you will vary widely depending on your industry. For further information on the professional indemnity issues that affect you, contact the relevant industry body or an experienced insurance broker.
Losing a claim against you can result in enormous costs and expenses. Some claims take more than five years to settle, leaving a large bill for court costs and legal expenses. Even when successful, defending a claim can be costly.
Professional indemnity is a complex and specialised area of insurance. If you want to know more about the professional indemnity policies and conditions relevant to your profession, you should contact an insurance broker with experience in this area.
Another option is to deal directly with an insurance company. However, remember that an insurance broker's role is to act as your representative and work in your interests, while insurance agents may act in their company's interest.
As claims are often made long after the event to which they refer, if you plan to retire, close your business or change insurers, you should take steps to arrange for 'run-off cover' to keep you protected against future claims.
