Professional Indemnity Insurance policy protects an individual from any third-party liability arising due to any mistake or decision by the service provider in his/her professional capacity that may have not gone down well with the party receiving the service.
In certain professions like medical, even a single mistake can lead to a big loss to the patient and his family. In some cases, the people in these professions have also been falsely accused of errors, forcing them to lose their reputation and suffer a financial setback personally.
According to a recently published study, legal proceedings accusing doctors for negligence have seen a rise of 400% in the Supreme Court. Although, only about 10- 15% of the cases have seen doctors being found guilty, the remaining 85% medicos none the less had to incur the cost of defending themselves.
Given the vulnerability of such professions; the insurers offer the professional indemnity cover to these professionals. The basic advantage of availing this policy is that it saves the professional/s from bearing the liability personally through his savings and gives him the power to fight in case the third-party goes to the court.
This policy can be availed by professionals (doctors, consultants, architects, lawyers and software engineers, etc.) providing services independently or under an organization (private, partnership and public like hospitals, consultant agencies, IT companies, BPOs, etc.). The organizations can be involved in providing services with a large staff working for them. Accordingly, this policy comes as an individual or a group cover.
Why should the indemnity cover be availed by both the organizations and the independent professionals?
- Legal & Financial Protection
- The policy protects the individual by covering any legal expenses arising due to third-party liability like court fees, claim settlement out of court, payment of compensation and other such expenses.
- It covers the insured professional for any error committed by him that may not involve willful neglect and is caused by unplanned errors and omissions.
- The expenses covered by the policy remain the same. But, for an organization; a single mistake done can harm its business and affect a larger number of employees than just the one who may have committed the error.
- It is necessary to become free of any financial or legal third-party liability sooner from an organization’s point of view.
- Retroactive Claims Applicable to Previous Employees
- In case there is a third-party claim referring to any error done by an independent professional before availing the policy cover, it is also covered.
- For example, suppose a legal advice given by a consultant might lead the third-party to lose the case in court, and he blames the advisor for it. Even if the advice was given before availing the policy cover, the policy may cover the claim if it satisfies the terms laid down in the policy.
- This policy is beneficial to organizations in case the liability arises due to errors made by a previous employee/s.
- Correct Estimation of The Liability
- In some cases, the liability may be too huge, and it might not be possible to calculate it correctly in the absence of the policy.
- For an individual, such a situation may become unpleasant as he may become bankrupt and might have to pay the compensation by selling off his valuable personal assets.
- Such a situation can pose a threat to the company’s business and reputation in the market.
- Even if it can gather financial backup, it will not be able to function efficiently as some of its financial resources will be lost in compensation or court cases.
- Safeguarding the Reputation
Independent professional and organization:
A professional indemnity insurance policy plays an important role in saving the reputation of the insured professional or organization. It is evident that in case an error has been committed involuntarily, it is going to be nevertheless, looked down upon by the public. Professions like the medical services do not have the scope for error as it is the question of life and death of a patient.
Such professions and the people involved in them are doubly affected due to any error in their job. Irrespective of whether the practitioner is working independently or in a company, his reputation bears the brunt of it. In case he/she is working in an organization, his involuntary mistake also deteriorates and affects the company’s business.
- Other Extensions
Independent professional and organization:
The policy is not limited to safeguarding one from small domestic third-party liabilities. Extensions can be purchased to cover litigation overseas as well, by the foreign clients and customers of the insured. An emergency cover can be purchased for such cases that will provide the money to the organization or individual professional on short notice.
Buying a professional indemnity insurance can be a mindboggling task as the customer service environment is a fluid plane, that is constantly evolving. You need to be future ready when it comes to reinforcing your consumer satisfaction quotient and Professional Indemnity forms a backup for such preparation. The online insurance advisor SecureNow can act as your partner in such situations, from creating your backup plan to executing and managing it and safeguarding your services from the unforeseeable consequences of error of judgement.
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