Professional Indemnity Insurance is an important consideration for most businesses. It covers your legal liability for a breach of your professional duty. So why is it that…
Professional Indemnity Insurance is an important consideration for most businesses. It covers your legal liability for a breach of your professional duty. So why is it that some people don’t think it applies to them? Unfortunately, a lot of professionals who give advice don’t think they’d ever be in a position where they would be liable for legal costs. In reality, it can happen all too often.
A recent example is when a federal judge ordered PricewaterhouseCoopers to face a $1 billion lawsuit, claiming it’s bad accounting advice was a substantial cause of the 2011 bankruptcy of MF Global Holdings Ltd. Although this is an extreme example, it highlights that giving bad advice can cost you a lost of money.
What Will Professional Indemnity Insurance Cover?
Professional Indemnity Insurance is designed for professionals who provide advice or a service to their clients. It protects against legal costs and claims for damages to third parties which might occur as a result of an act, omission, or breach of professional duty.
If a client suffers from financial loss as a result of your actions, they may decide to take legal action against you to recover those losses. Legal costs can be devastating financially and without proper representation, you also risk damaging your reputation. If you’re found liable for losses, you could find yourself in a situation where you have no option but to declare bankruptcy. This is where Professional Indemnity Insurance comes in as it will cover your legal costs, as well as any other costs associated with a claim.
Remember, there are certain exclusions and limits which need to be discussed with your insurance broker.
Do I need Professional Indemnity Insurance?
If you’re a professional, the short answer is yes. If you provide advice or a service as part of your job, it is a good idea to explore where Professional Indemnity Insurance applies to you.
Remember, a professional is considered an ‘expert’ in their field where others rely on you for that expertise. Even if you don’t consider yourself to be a professional, you may be viewed as one when it comes to claim time. A lot of people think that Professional Indemnity Insurance only applies to professionals such as lawyers and doctors. However, consider how many people provide advice these days – all of these people leave themselves open if they’re not insured.
For example, if you own a company offering advice or services for online presence or marketing, you need to consider indemnity insurance as you could be liable if advice you give proves to be misleading or results in financial loss. Individuals who provide advice for a living, such as engineers or architects, also need to make sure they’re protected.
If you’re not sure if Professional Indemnity Insurance is right for you, speak with your insurance broker and have a chat about your circumstances. You might be surprised at how open you’ve left yourself!
For any further questions or to organise Professional Indemnity Insurance, contact Elliott Insurance Brokers on 1300 635 315 today.
