Errors & Omissions

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Professional indemnity insurance, popularly known as PI Insurance or professional liability insurance (PLI), offers coverage to professionals like consultants, lawyer, architects, doctors etc against the error and omission claims filed by a third party i.e. clients. This policy indemnifies you against the legal cost and protects your professional reputation. Any claims arising out of negligence or breach of duty will be triggered under professional indemnity policy. This policy is meant to pay for defence expenses and damages that the insured is legally required to pay because of judgments rendered against the insured or settlements negotiated in accordance with the policy.

Any kind of negligence, oversight, and breach of duty which caused harm to the client can be covered in PI policy. The policy provides cover for litigation cost and out of court settlement costs. It also covers unintentional infringement of IPR, breach of duty in providing professional services or defamation. Professional indemnity insurance or errors and omissions insurance policy is a valuable asset for professionals to deal with contingencies. For example, If an IT professional has designed software for one of his client, and due to some error in software, all the client’s data got corrupted which caused loss to the client. In such case, the IT professional will be sued by the client for negligence in his professional duty. Incorrect advice provided by lawyers, wrong treatment done by doctor, incorrect design by the architect are few examples of error and omission or professional negligence which is covered in professional indemnity insurance.


Read About: Is it a legal requirement to have professional indemnity insurance?


Professional liability policy is available for professional services firm rendering services in information technology, Financial Institutions, Media Companies, Consulting firm. This policy is open for all profession, be it a contractor, consultant, freelancer or self-employed professional, IT professional, designers, fitness professionals or whosoever providing advice for living.

Case Study 1: XYZ tech. Limited, an IT firm developed a human resource information system for an FMCG firm in order to capture employees’ details, working hour and attendance. But the IT firm provided the malfunctioned information system which resulted in the loss of employee data. FMCG firm has no record to check the working hours of employees which resulted in the overpayment of wages. In this case, FMCG firm has sued the IT Firm for providing such malfunctioned information system. The IT firm has bought professional indemnity insurance so all the defence cost was taken care of by the insurer since professional indemnity insurance is activated in this case. This policy protects the savings of IT firm by covering legal cost which otherwise would be borne by the firm itself.


Also Read: Should You Buy A Professional Indemnity Insurance?


Case Study 2: XYZ HR consulting firm provides recruitment services to manufacturing firms. XYZ HR Consulting has been provided with the required job descriptions and education qualification requirement from their clients. One of their clients sued the consulting firm sending the email containing the client’s confidential information to the wrong candidate. This negligence on the part of the consulting firm resulted in a civil lawsuit against the company. As a consulting firm was covered under errors and omissions
Negligence or mistakes are part and parcel of every professional services or business. For some professional firms, this policy is a statutory or contractual requirement, especially in the medical and legal profession so it becomes mandatory for such professionals to buy this policy but it is also considered to be a good practice to maintain an optimum PI policy cover. This policy saves your firm from reputational crisis and lawsuits cost. If you are a professional, you are accountable for your advice so it is crucial to have enough funds for an emergency. When a client faces financial harm due to your error of judgement or because of your negligence, you will be held liable to bear the financial loss.

Being a professional comes with a lot of responsibility and mistakes might happen while providing advice so it is crucial to avail professional indemnity insurance.


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