Is professional indemnity insurance worth it?
According to news reports dating back to November 2017, a police case was filed against a doctor at Gorakhpur’s BRD Medical College on the charges of attempt to murder. This was regarding the death of over 20 children at the health facility.
This shows that while it’s human to make mistakes, not all are forgivable especially if it has caused losses to someone who was depending upon your advice or availing your service. In today’s competitive business environment, even a simple slip can prove expensive. The ensuing litigation can do damage to both your funds and reputation.
Such legal cases are piling up not just in the case of doctors but also for other professionals like interior designers, lawyers, and chartered accountants. For instance, in 2015 two Chandigarh residents sued an interior designer for not completing designated work within the deadline.
In professions where you impart service or advice to others, you always run the risk of being sued by the other party, especially clients. They may demand compensation as well. This is where indemnity insurance comes to the rescue.
The professional indemnity insurance is also called the errors & omissions (E&O) insurance policy as it safeguards one against liabilities that may occur due to negligent services or mistakes in your advice. Thus, this insurance helps you protect your market reputation and gives you the freedom to perform your professional duties without fear.
Understanding professional indemnity insurance
The E&O insurance policy gives ‘indemnity’ or protection to a company or its professional in case of an error. It covers legal expenses and if the verdict goes against the policyholder the insurer also covers compensation paid to the plaintiff.
A professional indemnity policy works to safeguard professionals against several risks or losses that could arise due to professional negligence, loss of documents or errors while performing one’s duty.
Significance of professional indemnity insurance
Businesses face litigations in case of mistakes. The company or a professional might find it daunting to recover from these losses. This makes it essential to buy a professional indemnity policy. It allows professionals to provide services to their clients without worrying about the possibility of errors.
The following benefits make the professional indemnity a must-have cover:
Reduces risk: You do not have to worry about paying for legal works from your pocket for unintentional errors. The policy helps professionals to pursue business without fretting about the cost of potential claims.
Builds trust: The E&O insurance policy also acts as a viable marketing tool. Clients will know that you will take adequate measures to fix any mistake at your end. It also assures your customers that you will take complete responsibility for your business. Thus, it will help you win their trust as well.
A glance at the benefits of professional indemnity insurance:
- Comprehensive coverage for various types of risks and losses
- Extensive protection against legal expenses
- Hassle-free documentation
- Option to increase or decrease the sum insured as per your needs
- Flexibility to customize the policy
- Expert support
Who should buy professional indemnity insurance?
Apart from big companies, professionals like doctors, surgeons, engineers, and lawyers should purchase professional indemnity insurance. It is also a must for anyone who imparts services or provides advice to clients.
The final verdict
The success of your business is the result of your hard work and determination. It is unwise to assume that mistakes will not happen in your business. Therefore, securing it with the appropriate professional indemnity insurance is the need of the hour.