Professional indemnity insurance covers you against legal liabilities
A mistake is an unintentional error, which is common in the course of business and dealing with clients, but it’s not forgiven free of cost. If you want to carry out your business while protecting it’s financial position, yourself and your employees, you need to know about professional indemnity insurance.
What is Professional Indemnity Insurance?
No matter how good you are as a professional or how well you conduct your business, you’re bound to make some mistakes. Other times, a client may wrongfully sue you. In either case, you will have to bear a heavy financial burden for incurring legal expenses.
To protect yourself and your business against such contingencies and legal threats, buying professional indemnity insurance is a must. Such an insurance cover will provide you indemnity for expenses incurred in your defense, as well as any damages that may have to be awarded, in case you lose.
Why is it Important?
The business environment is dynamic and full of risks, and being sued for a host of scenarios like negligence, loss of goods or documents, injury to third party, damage to property is common. When a company is sued, it not only disturbs the normal flow of business but the heavy expenses incurred also adversely impact its financial standing, which could also be hard to recover from.
What are the Benefits of Professional Indemnity Insurance?
Other than the primary benefit of being secured against financial risks arising out of lawsuits, having a professional indemnity insurance cover will also provide you peace of mind. It will allow you to conduct your business freely and give your professional advice and opinion without the constant fear of being sued.
This is especially crucial for professionals who provide expert opinions and advice like doctors, psychologists, accountants, interior designers, architects and all kinds of consultancy firms. Another major benefit is that your clients will be assured that in case you make an error, you will take steps to fix it and such a display of responsibility and accountability will increase their trust.
What You Should Note Before Buying Professional Indemnity Insurance?
Whether you’re running a business or are a professional providing service, you need to determine what are the kind of risks in your industry and what your clients could hold you accountable for. This will help you in buying the appropriate policy that will benefit you in all the right ways.
You also need to determine your budget and select a policy that fits your financial plan. Generally, a policy has certain exclusions and does not cover claims for bankruptcy or intentional damage to clients.
Now that you know everything you need to about professional indemnity insurance, you can equip yourself with a policy cover to protect yourself against the avoidable financial risk of running a business.
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