An act of negligence, error, or omission can cause a service provider to lose a large amount of money to compensate for the mistake. Clients claim for losses that can be financial in nature or can be caused by bodily injury. Such incidents bring the dire need for professionals in various areas to insure themselves with professional indemnity insurance.
Some areas where professional indemnity insurance has become necessary for service providers are:
Accounting firms:
Accounting firms deal with lots of data and numbers on a daily basis. The client data that they handle include their financial numbers depicted in the Income statements, balance sheets, and cash flow statements. If any numbers go wrong or any document gets misplaced, it can be fatal as the client can lose a large amount of money. In such a case, the accountant/accounting firm may have to pay huge reimbursement to the client. Hence having professional indemnity insurance can save the accounting personnel and hence it has become necessary for them to have such a policy.
Medical practitioners:
Negligence cases because a doctor one of the common news that we hear. This negligence is not only fatal to the patient but also can cause a hindrance to the medical practitioner’s career and reputation. Hence professional indemnity insurance is a necessity for medical practitioners to avert financial losses because of such errors or an act of negligence.
Read more: How is Claim Processed in Professional Indemnity Insurance?
Law firms:
Professional indemnity insurance helps to settle claims concerning to the breach of interest, confidentiality or incorrect advice to clients. As lawyers are widely involved in advising their clients, any incorrect advice or breach of confidentiality can lead to serious financial trouble. Hence professional indemnity insurance can provide coverage to law firms/ lawyers in the case of any errors or negligence.
Business and management consulting firms:
Marketing and education consultants are involved in advising businesses or clients daily. Any act of omission, error, or negligence on their part can lead them into huge trouble and can cause financial losses. A professional indemnity insurance cover offers protection to them and can save them against huge financial losses. Hence consultation has also become a critical area where this policy is vital.
IT firms:
IT professionals are involved in providing software and programming solutions to clients. Any negligence or breach in the activity can affect the client’s website causing huge losses for them. Ultimately the client will hold the IT professionals responsible for the losses due to the faulty software/program. The reimbursements, in this case, can go to huge numbers and can be difficult to manage. Hence professional indemnity insurance can cover such reimbursements and protect IT firms against such claims.
Engineering or construction firms:
If a roof slab collapses or the construction is faulty, it may cause bodily injury to the client and can create havoc for the engineering or the construction firm. Losses in this case are enormous. Hence it has become essential for such firms to protect themselves against any such claims by acquiring a professional indemnity insurance policy.
Read More: How does Professional Indemnity Insurance Benefit the IT Firms?
Financial advisory firms:
When a financial advisor gives a wrong quote or advice to his clients, he is inviting a huge problem for himself. Wrong advice will cause losses to the client who can claim huge reimbursements. Thus, a professional indemnity insurance policy has become a necessity in this domain.
Case Study:
A Software firm was handed a project to design a client’s website. All the requirements were met by the IT firm and upon completion of the project, the client got access to its new website. After a week, it was found that the IT firm had wrongly placed a digit in the customer care number on the website and hence the client faced a lot of negative reviews about providing a wrong number on their website.
It caused them to lose some major clients and incur financial losses. The client sued the IT firm for its negligence. Fortunately, the IT firm had purchased a professional indemnity insurance policy and hence was able to cover the losses faced.
