Professional indemnity insurance is intended to protect professionals and their businesses in the event that any claims will be made by a client or any third party, suggesting that they have suffered loss as a result of non-performance, professional negligence in the services provided or breach of contract. This insurance is also meant to cover legal and other costs and expenses acquired in the defence of any claim.
How Does Professional Indemnity Insurance Differ From Other Types Of Liability Coverage?
Professional indemnity insurance operates works on a ‘claims made’ basis. This means that it is the policy in force at the time the claim is made which will operate, regardless of when the work was actually undertaken or when the supposed act of professional negligence happened.
Clients or third parties can bring claims years after services are complete, depending on the relevant limitation periods, stresses the significance of retaining suitable and effective cover not only while the project is being undertaken but also for a number of years in the future.
Who Should Have Professional Indemnity Insurance?
Persons or entities who have a business that sells knowledge or skills, such as providing advice, design, qualifications, supervision etc., have a responsibility and duty of care to their clients, and other third parties, through the services and assistance they provide.
A lot of professions are required to have professional indemnity insurance as a regulatory requirement or as part of their certified authorisation. This list of profession includes solicitors, accountants, realtors, architects, surveyors, mortgage intermediaries, insurance brokers, and financial advisers.
Other businesses in the line of consultancy such as consulting engineers, advertising, PR agencies and designers also opt to have this type of coverage to meet their client requirements and to profit from financial protection in the event of a claim arising.
Info source: www.reapi.com.au