Also referred to as professional liability insurance or PI insurance, covers legal costs and expenses of professionals such as accountants, legal advisors, physicians or lawyers. Professional indemnity insurance covers damage or costs caused by the alleged activity of professionals to their clients who claim for their loss.
Professional liability insurance helps in business to cover the damage against claims of negligence. Also referred to as Medical Malpractice Insurance for doctors or errors and omission insurance for accountants, depending upon the professions they are in.
Why you need Professional Indemnity Insurance?
Many professions need professional indemnity insurance as back support for their regular industry requirements respectively. If you don’t have PI insurance, without it, you will have to face a loss of amount during any allegation on you. You will need professional indemnity insurance if:
- You provide consultancy or work as a legal advisor to your clients.
- Working as a designer for clients, such as interior designers, architects, or design engineers.
- You want protection against the allegation of negligence in work undertaken by you.
- You work as a contractor, freelancer or self-employed professional, and your clients asked to arrange PI insurance to take over a contract.
It’s a coverage that is not provided for homeowners’ endorsement or in-home business policies. It only covers the claims made during the policy period.
How does PI insurance work?
The professional indemnity insurance policy is based on the claims that are made. Which means it will cover only the claims made during the tenure of the policy. Make sure you get your renewals of policy done on time, to avoid interruption.
Any financial loss due to fake advice or negligence will be covered only if those mistakes are done during the tenure period. Claims made before or after the tenure policy period will not be covered. And it won’t come under the responsibility of professional indemnity insurance.
Retroactive Date in Professional Indemnity Insurance :
Many insurance companies provide a retroactive date in PI insurance. It is the period or number of days before the actual date of tenure of policy date. That means, it can cover the claims during the tenure period. But the event or incident that causes financial loss may occur before the period. Events that occurred during the retroactive period can be claimed if the claim is made during a tenure period of the policy.
What Professional Indemnity Insurance doesn’t include?
PI insurance coverage doesn’t include criminal prosecution, not all forms of legal liability under civil law. Cyber liability and other technological issues are not necessarily included in core policies. These types of issues are available in separate policies.
Liability insurances are only for damages to someone else, because of you which means you are “liable”. It doesn’t pay for you and your family’s own injuries or damage, and intentional damages are not acceptable. Liable blames are not always clear-cut cases.
