Businesses gain or lose money almost all the time. While we celebrate our wins, the losses depending on how severe can be the ruin of the company, smart business owners understand this and would take the right measures to protect their business so that when the losses hit, they bounce back. One of those measures is opting for a Professional Indemnity Insurance Plan.
What is Professional Indemnity Insurance?
Professional Indemnity Insurance is a legal backing that protects you from incurring an expensive loss when your client decides to sue you to court for a lack of satisfaction of goods or services provided. It is a secure way of designating a fixed amount to pay your clients in the event of damages. It secures both the business and client when expensive mistakes occur.
Who Needs Professional Indemnity Insurance?
- Corporate bodies
- Legal Firms
- Small Scale Businesses
- Manufacturing Companies
Why Do You Need Professional Indemnity Insurance?
1. To Protect the Companies Reputation
The existence of Professional Indemnity Insurance covers errors, omissions, and negligence of the company. These mistakes are often too costly and may have the potential to mar the company’s reputation. The company can allocate a certain amount to this insurance plan. This will help salvage this situation before it gets out of hand.
2. To Prevent Scandals
A rapid response prevents further scandals which may have the potential of making the news. It reduces the possibility of turning business allies into rivals. Professional Insurance plan makes possible the immediate compensation of affected clients. No need for long meetings with the board of directors to analyze the damage level and insurance payment.
3. Increases Trust among Clients
Some clients are keen on knowing if a company has Professional Indemnity Insurance before any business transaction takes place. Having this makes them feel assured that the company is futuristic, responsible and has their best interest at heart. They know for sure that when a crisis occurs, the company is ready.
Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.
Most professionals are to have this agreement to protect their reputation and finances. Let’s look at the various ways indemnity insurance protects you or your business.
- As a legal professional, you’re liable to accusations of negligence or inadequate performance by your client due to a piece of legal advice gone wrong. Insurance indemnity protects you from overcompensating and ensures that due process follows through to completion.
- Medical practitioners are to own malpractice insurance. This is a form of indemnity insurance that protects medical practitioners from negligence claims that may lead to physical or mental harm to patients.
- Business owners or executives require Professional liability insurance which protects them against negligence claims due to damages that result from errors, poor performance or failure to perform. Professional liability insurance is also referred to as errors and omissions insurance.
- If your organization is in the business of manufacturing products for sale, then product liability insurance is what you need. This insurance protects you against lawsuits due to harm caused by any of your products.
In the financial industry, an investment professional who provides financial advice that results in the purchase of investment products or tax must require an Errors and Omission insurance. This ensures that they are protected when their client makes negligence claims due to poor investment advice that led to reduced profit or severe losses.
However, as a company owner, you have to be ready for the good, bad, and ugly. Professional Indemnity insurance gives you confidence in the event of huge errors that lead to losses.