Professional indemnity insurance is a niche kind of insurance that protects a professional’s liability for claims made against them. Depending on the nature of the employment and the policy’s coverage, the costs can vary enormously. If you’re thinking about purchasing professional indemnity insurance for your business, here’s what you need to know about its pros and cons.
Pros of Professional Indemnity Insurance
No extra cost to your business
Professional indemnity insurance can be purchased at a rate that is less than the cost of other types of insurance, including workers’ compensation.
Easy to understand and purchase
Professional indemnity policies are designed to protect your company in the event of an accident or injury that may be caused by a client, a customer or even a vendor, subcontractor or employee.
Protection against lawsuits
If you are sued for negligent or intentional acts, personal insurance services provide an extra layer of protection by providing legal defence costs in addition to medical care and lost wages if you have an accident while working on behalf of your company.
It is important to note that, you can be reimbursed for legal expenses, even if you don’t win your case. This is an important benefit for people who are involved in high-risk fields.
Protection from third parties
It protects you from lawsuits by third parties who may have a claim against you or your business. This could happen if someone has a bad experience with your product or service and sues you for damages (such as medical bills). The professional indemnity policy will cover the costs of defending against these claims, including attorney’s fees and court costs.
Covers your assets
The insurance also covers you for any damage to your premises and other assets that you have in your business such as computers and furniture.
Flexibility of policy
You can choose the level of cover you want. It will not affect your premium payments. You can also add extra policies as you need them.
You can take out a policy with an unlimited amount of cover so that no matter what happens it will pay out on any claim made against your practice or business.
- Protection against lawsuits can be costly and time consuming. Professional indemnity insurance provides a legal defence fund to help you protect your reputation and business.
- It can be difficult to estimate the cost of defending yourself against a lawsuit. Without insurance, your company could face hundreds of thousands of dollars in legal costs and lost income if you are found liable.
- Professional indemnity insurance also provides a savings account where you can put down a bond or collateral if you are sued. The amount is usually low enough that it won’t affect your business’s cash flow.
Disadvantages of Professional Indemnity Insurance
The cons of professional indemnity insurance are as follows:
- The policy is not suitable for all types of businesses. It is only suitable for those who have a high risk of lawsuits.
- It only covers licensed professionals, not unlicensed practitioners.
- It may not be suitable for freelancers or small business owners.
- Choosing the wrong policy could be catastrophic
Choose the Right Policy
There are many factors to consider when choosing a policy, from the level of cover you need and how long it will last to whether or not your business is covered by an industry-specific scheme.
If you’re unsure about which insurance cover may be right for you, speak with your broker or insurer about what type of risk might be covered by their products. They will be able to advise on which policies offer the best protection for your business and whether there are any conditions attached.
When it comes to professional indemnity insurance there are both pros and cons. However, the former clearly outweigh the latter. For any business the reputation and the brand name comes first. It can help ensure that your company has the protection it needs in case of a lawsuit or other type of legal action. It also provides peace of mind and reassurance that your company is covered for any potential claims against it. So, having a professional indemnity insurance is always a plus point.