Errors and omissions are part of every business. These can occur in any business despite having the best intentions all the time. However, errors such as incorrect advice, misinterpretation/breach of duties, good faith violation, and negligence can turn catastrophic in no time. Such mistakes can be an enormous threat to you and your business. For that reason, professional indemnity insurance is gaining exponential popularity in the present times.
Overview of PI insurance
It protects you and your professional practice from uncalled-for lawsuits in case you fail to deliver what you promised. Here is a brief overview of PI insurance that you should know to keep yourself safe while performing your profession.
Understanding professional indemnity
Professional indemnity (PI) insurance fundamentally protects businesses and individuals who deliver services based on their knowledge. Services such as architecture and engineering, consultation, etc. have personal skillsets and knowledge at their foundation.
In such professions, your advice can lead to results that are less than or exactly opposite of the anticipation. PI insurance protects you in such cases and provides support in case of lawsuits. The cost of PI insurance can vary depending upon the size of your company and the scale of risk involved.
What does professional indemnity insurance cover?
Whether you are a sole trader or a company, you must be thoroughly aware of your professional rights. PI insurance protects you against claims for losses that your client or any third party has raised, sighting negligence on your part. You can find a wide range of policies and choose a suitable level of protection based on your needs and the risks involved. Generally, PI insurance would include the following pointers.
- Deceptive advice or misleading conduct
- Misrepresentation or defamation
- Breach of duty or intellectual property rights
- Financial support for defense in lawsuits
- Violation of good faith and negligence
- Damage caused by fraud
Benefits of investing in PI insurance
PI insurance always keeps you on a safer side while you practice your profession. It gives you more confidence and helps in elevating your performance and reputation. Following are a few benefits you can draw from professional indemnity insurance.
Mental peace
If you are help responsible for losses (financial or reputational) your client has faced due to your consultation, it can be disturbing. The financial burden that comes with such claims further adds to your stress. Knowing that your expenses are covered can give you great mental peace and confidence to continue your services efficiently.
Financial protection from lawsuits
PI insurance covers court costs, the cost of filing papers, and attorney fees in case of a lawsuit against your professional practice. It provides you a shield to withstand legal repercussions of any error or omission and prevent business interruption.
Enhanced credibility
PI insurance gives a great boost to your brand image and goodwill. Your clients know that you are prepared to take accountability for your services. In case, they incur any loss due to your advice, you are back with strong insurance support.
More opportunities and higher probabilities of winning tenders
As mentioned earlier, PI insurance proliferates your reputation and allows your clients to have faith in your services. This gives you a competitive edge and escalates your chances to win contracts. Also, some organizations and government authorities mandate PI insurance to qualify to apply for a tender. Having one will increase your chances of winning it.