~ Professional Indemnity
Posted by faisalrenzo on March 3, 2011
“Potential mistakes are everywhere…” that’s what I told my doctor friend which is also my life insurance’s client.
Today, on the way back to office I drop by at his clinic in KL just to say hello. “Let’s go for a drink, I need a break…” he said when he saw I’m coming over. Then we talk and laugh about life. Then he said, “I’m quite busy lately with all the patient, medical talk and tomorrow I have to go court”. “Court? What happened, bro?” I’m puzzled.
He told me that he needs to go to court as a witness for a post-mortem that he conducts on a man involved in an accident back in the year 2002. “I don’t know what would they asked me and what to answer because it’s been a long time, maybe I forgot few key facts…” he said. I asked him “Are you covered yourself with professional indemnity insurance?” “No…” His answered with worried. Then I brief him…
As a professional, if you make an error or omission you are exposed to being sued in negligence or for breach of contract. Professional negligence committed by you or your predecessors, or your employees during the conduct of your professional business activities. The professional nature of your work usually means your advice, service or product that may have significant impact or effect to third parties.
Professional Indemnity Insurance covers professionals for certain types of claims made against them by third parties under civil law. Anyone providing professional services has a duty to ensure that both their clients and third parties do not suffer any financial losses as a result of the services provided. In the event that a service provider causes a loss, he or she is liable in law to compensate the person(s) who has suffered a loss. Normally the victim would have to establish negligence on the part of the service provider in order to succeed in a claim.
Professional Indemnity Insurance is a solution for service providers to transfer the risk of being sued for a mistake that they might make. A Professional Indemnity policy like most other liability policies is written on a “Claims Made” Basis.
However, in certain circumstances the policy will cover losses arising from Bodily Injury and Property Damage. For instance the Engineers’ Professional Indemnity Policy will only respond to claims arising from Bodily Injury or Property Damage as a result of negligence on the Engineers part in discharging their Professional Services.
Who needs it?
Quite simply, any person, company or partnership providing advice, designs, specifications or others professionals services – where fees are not necessarily involved – can be described as a “professional”.
Examples of professionals requiting Professional Indemnity Insurance:
- Financial Advisor
- Lawyer/ Legal Profession/ Solicitors
- Property Manager
- IT Consultants
- Employment Agency
- Travel Agents
- Security Guard
Examples of coverage:
- Breach of duty by reason of any wrongful professional act
- Defamation – libel and slander
- Loss of documents
- Dishonesty of employees
- Defense costs