PROFESSIONAL INDEMNITY INSURANCE

WHAT IS PROFESSIONAL INDEMNITY

It is a form of liability insurance which helps protect professional advice- and service-providing individuals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.

The coverage focuses on alleged failure to perform on the part of, financial loss caused by, and error or omission in the service or product sold by the policyholder.These are causes for legal action that would not be covered by a more general liability insurance policy which addresses more direct forms of harm. Coverage sometimes provides for the defense costs, including when legal action turns out to be groundless. However, coverage does not include criminal prosecution, nor a wide range of potential liabilities under civil law that are not enumerated in the policy, but which may be subject to other forms of insurance.

Professional lndemnity is required by law in some areas for certain kinds of professional practice. The primary reason for professional indemnity coverage is that a typical general liability insurance policy will respond only to

• Bodily injury,
• Property damage,
• Personal injury or
• Advertising injury claim.

Common claims that professional indenity covers are:

• Negligence,
• Misrepresentation,
• Violation of good faith and
• Fair dealing, and
• Inaccurate advice.