As a professional running a business, you understand the importance of managing the risks that your business faces and protecting your business assets against those risks. If you’re a professional, one of your key areas of exposure is around the advice you give or the services you provide to your clients, which is why it makes sense to consider Professional Indemnity Insurance.
What is professional indemnity insurance?
Professional Indemnity Insurance is designed to protect your business against financial losses and the costs of any legal action taken against you by third parties for damages arising from acts, omissions or breaches of professional duty in the course of your business.
Having Professional Indemnity Insurance can cover the cost of compensation to your client, as well as providing for the legal costs associated with defending a negligence claim, claims investigation costs, court attendance costs, and public relations costs which can represent a significant proportion of the overall claim.
What’s the risk of going without professional indemnity insurance?
While you may do your utmost to provide a high quality service, if things don’t go according to plan and the service you’ve provided isn’t up to scratch, or you make a mistake resulting in your client suffering financial loss or injury, you may find lawyers knocking at your door. Mistakes happen, even to the very best of us, and it only takes one disgruntled customer to bring a lawsuit against you that could cost your business thousands or even tens of thousands of dollars just to defend. And that doesn’t include the cost of any compensation claims that could potentially be awarded against you.
Even if you haven’t done anything wrong, an unsubstantiated allegation against you could cause considerable damage to your good name and the reputation of your business. As such, you won’t want to just settle a claim quickly – you’ll want to defend the claim in court to clear your name.
Unless you’ve got a law degree up your sleeve, you’re going to need some expert help. Having Professional Indemnity Insurance can not only give you access to the funds you need to pay for your defence, but also your insurer has the expertise in dealing with claims as well as access to a panel of solicitors ready to fight the battle for you.
Retired? You might still need to be covered…
Even if you are no longer practicing it’s important to consider continuing to hold your Professional Indemnity cover, as this type of insurance operates on what is known as a ‘claims made’ basis. This simply means that it covers you for claims made during the policy period, rather than when the work was actually done.
This article was written by BizCover. The views expressed in this article are the author’s own and may not reflect the views of Canstar.