Professional indemnity insurance is key for all service related industry. It doesn’t matter whether your business involves giving advice, offering professional services or managing clients’ data. Whichever industry you are in, you have the responsibility to provide quality advice or service. If your team has been negligent or the advice it has imparted was incorrect, you will expose yourself to litigation by clients. When you sign a contract with a client or join a professional body, you will need to have professional indemnity insurance. You will also need to specify certain annual limits in your contract.
How much does litigation cost?
Many business owners underestimate the cost of legal action. If your company is involved in litigation, you will end up spending tens of thousands of dollars in recruiting a lawyer to defend you. And this is irrespective of whether you are responsible or not. Most SMEs have a lot of trouble funding these costs.
Professional indemnity insurance will cover these legal costs. It will also cover the indemnity that may be requested if your company has been considered negligent in its business operations.
Protecting your business reputation
If your client sues you for negligence, it is possible that the court may not find you responsible for the same. And, it is possible that you will try to settle the matter as quickly as possible. However, it is important to understand that this could be misunderstood as an admission of guilt or negligence. It might then have a long-term impact on your reputation.
Being able to protect yourself in such a case will allow you to clear your name of any wrongdoing and protect your company’s reputation.
What policy should I have in place?
Each contract is tailor-made according to the type of activity performed. Other factors might include the business area, company and management background, etc. Understanding the underwriting conditions, as well as the coverage limits, are essential to ensure the coverage will be fully in force when an incident happens.