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Professional Indemnity Insurance

by Admin on October 28, 2011

Fact: Hindsight is usually catastrophic when it comes to the subject of professional indemnity insurance.


f you do not have it at the very moment you need it, you are SOL, leaving you at risk of tremendous, even unimaginable loss. There is no need to blather about the litigious society in which we live today. There are more lawyers than doctors in Darwinian-struggle for their disproportionate cut of your health care dollar. In this case, the lawyers are winning. Example: an ob-gyn in the state of Florida had to pay an average of $195,000 in 2004 for malpractice insurance before he made the first dime for himself. While lamenting the plight of the poor ob-gyn, one would be very naive not to know that everybody is suing everybody else.

We recall how the legendary CPA firm, Arthur Anderson, after getting caught up in the Enron swindle, was forced to close its doors. Then, there is the case of Baring Brothers, with a distinguished 300 year tradition of investment banking, collapsing in 1995 after one of its traders, Nick Leeson, made some ad bets with company funds to do some off-book trading for his personal account.

Public Liability And Professional Indemnity Insurance

One may find it difficult to grieve over the demise of Arthur Anderson and Baring Borthers as they were derelict in exercising due diligence over the activities of their subordinates. However, companies and individuals, regardless of size, are also being sued for insane reasons, frequently falling into the category of absurdly ridiculous.

The sad fact is that any company offering professional service to the public is at risk of being sued for reasons typically falling into the category of negligence or breach of duty. Caution demands one not parse over the definition of “professional service” as the list of “professions” is expanding at a rate greater than the always-expanding universe. A case can always be made in a court of law that any service constitutes a professional service when a person of litigious mindset has a grievance with a vendor.

This all-inclusive definition would include the Comfort Ladies of the Night. In our highly competitive, global economy, client expectations for excellence in quality and service are a given. It is insufficient to display an exemplary level of brilliance, in the dispensing of one’s professional services. The professional service provider remains at risk of being sued for alleged negligence or breach of duty. Savvy professional service providers close the gap between excellence in quality of service and likelihood of being sued by taking out Professional Indemnity Insurance most appropriate for the type of professional service they are providing. Low-level professional service providers clearly require a low-level of Professional Indemnity Insurance.

Key question: “Precisely what does Professional Indemnity Insurance Cover?”

The short answer is that Professional Indemnity Insurance protects against reputation and check-threatening allegations made by disgruntled clients. The short list of allegations include: libel, slander, negligence, breach of duty, intellectual property infringement (copyrights, trademarks, loss of documents, purloining company secrets, dishonesty, etc., etc., etc.).

How Much Professional Indemnity Insurance Coverage is Required?

Needed coverage will differ as a function of the services provided by the professional service provider. Low-level service requires low-level coverage. The higher the level of service, the higher the level of needed coverage. It all hinges on the circumstances of the particular service. Check with knowledgeable professional indemnity insurance brokers for guidance in the selection of coverage appropriate for your business.

One Final Caveat:

Profession Indemnity Insurance providers have their built-in “Escape Clause.” They do business on a “claims made and notified” model. This means the policy needs to be in force at the time the claim is made rather than at the time the alleged error was made. The timing of the claim and the timing of the alleged error are seldom the same. For a claim to be accepted by the Professional Indemnity Insurance carrier, the policy must be in force at the time the claim is made and notified.

The practical interpretation of the “claims made and notified” verbiage is that indemnity insurance coverage at the time of the alleged mistake will do one naught if coverage is not in force at the time the claim is made. Savvy businessmen “with history” that could come back to haunt them continue their coverage long after the alleged event itself to indemnify against events long forgotten.

Professional Indemnity Insurance Online Videos

In the following 7 step videos there will be explained what professional indemnity insurance is, what kind of people need professional indemnity insurance. We understand that there are a lot of different professional indemnity insurers and insurances, like architect professional indemnity insurance, professional indemnity insurance accountant or solicitors professional indemnity insurance. The videos further explain what professional indemnity insurance protect you from and what claims can happen. There is a little bit information on professional indemnity insurances quotes and why you should use a specialist broker. We think these videos are very informative and nice to watch.

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