Professional indemnity insurance is one of the most popular insurance among professionals since it saves them and their business at the time of error and omission. Negligence, incorrect advice, violation of good faith, misrepresentation or breach of professional duty might bring doomsday for your business because clients these days are more conscious about their rights. If not delivered with what you have promised, they might sue you. To be on the safe side, it is better to buy professional indemnity insurance to cover your profession. It provides various intangible profits.
Following are the advantages of availing professional indemnity insurance:
1. Financial Protection from Lawsuits: Financial losses from lawsuits can interrupt your business but if you have professional indemnity insurance, all defence cost is borne by the insurer. Defence cost such as lawyer fees, court cost, cost of filing legal papers etc is covered in errors and omissions insurance. It provides a financial protection shield to meet legal repercussions against error and omission claims.
2. Peace of Mind: Performing professional services with greater confidence bring effective results. If you are held responsible or being blamed for financial or reputational loss occurred to the client because of your advice or consultation then it put a great mental and financial burden on your organization. But professional indemnity insurance provides helping hand in such scenario and handle all your strain by providing the required monetary help.
3. Increases Credibility: Professional indemnity insurance enhances your goodwill and brand image. It assures your clients and investors that whatever professional services you are rendering if some discrepancies arise, professional indemnity insurance is there to provide strong support. As a professional, you are accountable for your services and if you have taken professional indemnity insurance, you let the client feel confident about doing business with you.
4.The smooth running of your business: Claims arising due to error and omission may cause huge financial loss and interruptions in your operations. But professional indemnity insurance helps in restoring the former business position after all the losses incurred due to legal court procedures. Dealing with legal issues are time taking and affect your business productivity but professional indemnity insurance helps you save your time in the incidence of an allegation.
5. More chances to win tenders: Some contractors and government authorities put the condition of having professional indemnity insurance in order to apply for the tender. One can stand a high chance of winning a tender if professional indemnity insurance is placed. Even some profession statutory body has asked for this policy as a mandatory standard to perform professional services like CA, Architects etc.
6. Additional Benefits: One can make PI insurance policy more powerful by adding various extensions such as defamation, loss of documents, Libel & Slander dishonesty to cover every possible legal claim. These benefits ensure complete protection of a professional as it tries to cover every probable and possible risk.
A.Z. logistics firm is operating on a large scale and delivers various FMCG products to big warehouses. The firm A.Z. logistics out of negligence delivered a stock of worth Rs 8 Lakh to the wrong address which resulted in a huge loss for the client. FMCG firm then filed a case against A.Z. logistics, the reason being the negligence in duty. Deliveries to the incorrect address is a neglectful act and being an intermediary, A.Z. logistics will suffer huge financial loss while fighting the case against FMCG Firm and it will surely affect its reputation in the market. But it had professional indemnity insurance and this policy saved the firm from the huge financial crisis. All the defence cost is being reimbursed by the insurer after the claim settlement and A.Z. logistics gained its financial stability back because of PI insurance cover.
It is a useful practice to obtain professional indemnity insurance or errors and omission insurance. There are a plethora of benefits one can get out of this policy and being a professional, one should perform professional services without being afraid of lawsuits and PI policy provides you with that secure zone and peace of mind.