Professional Indemnity Insurance: What is it? Why do you need it?
By Jim Vass.
Professional Indemnity Insurance is designed for people who work in professions where they provide advice – bookkeepers, real estate agents, marketing advisors, architects, life coaches personal trainers… the list goes on.
Basically, if you’re in business, it’s worth considering. Here’s why.
Professional Indemnity Insurance covers your business against claims for liabilities owed to a third party (typically a client) for any loss suffered arising out of the provision of ‘professional services’.
There are hundreds of examples. Because, we are, after all, human, and sometimes, despite the best of our intentions, mistakes can be made, things can go wrong.
Professional indemnity insurance will cover you in your chosen profession for such things as: personal injury as a result of physical exercise directed by a personal trainer, incorrect designs made by an architect or draftsman, incorrect advice with regard to someone’s finances. If you accidentally breach confidentiality, if you make an error of judgement.
Any legal case against your business can be costly. And the right professional indemnity insurance can help you to defend any claims, as well as enable you to afford any payouts determined as compensation to the injured party via mediation or the courts, if you, or one of your staff members is found to be liable for the error.
Legal costs alone can quickly escalate into the tens of thousands of dollars, and most small businesses would struggle to fund these costs – it could mean bankruptcy.
But it’s not just the cost, it’s also the stress and the fact that often legal cases can be long and drawn out – this can really interrupt your business.
If you have insurance, at least you know that the financial side is being taken care of, and you can ‘keep on keeping on’.
Whatever industry you work in, you hold responsibility for providing advice or services that are of quality.
If someone makes a claim against your business, and your reputation is at stake, professional indemnity insurance will enable you to defend your reputation, and protect you if something goes wrong.
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