Professional Indemnity Insurance
Professional indemnity insurance offers protection in the case of a mistake or error on your part which leads to financial or physical harm to a third party or their property. This is also commonly referred to as Errors and Omissions insurance. It is often used by lawyers, accountants, estate agents, engineers, architects and so on. In many cases, this type of indemnity is required for people working in these professions.
If your business offers your knowledge or skills to a client, you should have some type of protection in the event that you make a mistake. There are several types of liability insurance, which include general and public liability. General covers a few areas with basic protection and is usually chosen by smaller businesses, while public liability covers for accidents that could happen to the general public, such as a faulty road or outdoor construction. Usually these policies are used along with professional indemnity.
Professional indemnity insurance provides protection in several ways. One of these is to provide for legal expenses in the case of a court case. It may be helpful to note that the decision to challenge a claim in court is normally up to the insurers to decide, as they are the one’s paying the bills. The alternative for them would be to settle without a court case, and this is usually only done if their investigation shows that they are likely to lose the case and will be wasting money on the legal battle.
The damages awarded by a court or amounts agreed 'out of court' are usually covered by these policies, although there will typically be an excess amount to be paid by the policyholder.
Your insurer may also choose to settle with a claimant even when you feel they would win the case. This will be a decision taken by them to avoid the cost and time involved in fighting the legal case.
A policy will typically cover you for several million pounds in claims, although of course you should make sure you read all of the terms and conditions thoroughly, and ensure that you are happy with the levels of cover provided.
