Professional Indemnity Insurance Policy

Professionals like doctors, lawyers, architects and chartered accountants in the course of rendering professional service, may commit acts of error or omission, resulting in a legal liability.  It is advisable for a professional to take a professional indemnity insurance policy which will shield him from huge expenses he would have to bear in the form of compensation and legal fees.

Scope of Professional Indemnity Insurance Policy

A professional who has taken indemnity insurance will be indemnified by the insurance company for any loss caused by an act of the insured which has led to a legal claim being filed by a third party.  It should be noted that the policy covers the action of not only the professional who has taken the policy but also his qualified employees, assistants or partners.

For instance, a patient may suffer an injury caused by an error of a nurse working for a doctor.  If the doctor has taken a professional indemnity insurance policy which includes his employees and if the injured party files a claim against the doctor, the insurance company will compensate the doctor.

Features of a Professional Indemnity Insurance Policy

  • A person who has taken professional indemnity insurance can file a claim with the insurance company only if and when a liability arises.
  • If the liability is due to an error willfully committed by the professional or in contravention with the law, the insurer will not compensate him.
  • The liability may be due to bodily injury caused, loss of data or documents, infringement of trademarks or patents depending on what kind of professional is taking the insurance.
  • While the claim can cover legal fees and expenses, it cannot include any penalties or fines imposed on the insured.

Kinds of Professional Indemnity Insurance Policy

  • A professional indemnity insurance policy may be taken either on the basis of ‘negligence’ or ‘civil liability’. 

A policy based on ‘negligence’ will be covered for acts of negligence or omission by the insured.  A policy taken on the basis of ‘civil liability’ would protect the insured professional from any civil liability.

  • The policy taken may be on ‘each and every’ basis or ‘in aggregate’ basis.

 In the former case, the insurer undertakes to provide compensation for each claim up to an agreed limit.  The remainder of the loss will have to be borne by the insured.  A policy with an ‘in aggregate’ basis will be covered for a fixed total sum.  All claims will be entertained as long as the total amount of the claims is below the agreed total.  Any amount of loss beyond this limit will be borne by the insured professional.

Online Professional Indemnity Insurance Policy

Selecting the right kind of professional indemnity insurance policy may be difficult for the busy professional.  In fact, he may put off covering himself against professional risks due to the lack of time.  Buying professional indemnity insurance online would be the best solution for such people.
The person wishing to buy professional indemnity insurance online has two choices.

  • He can go to the websites of different insurance companies which offer online policies. Going to each individual website may take too much of time.  It would also not facilitate easy comparison.

  • He can go to a web site which has tied up with various insurers.  This option would be better for a person wishing to buy an online policy.  Here, he can decide what kind of Policy he needs and get comparative quotes from different insurers.  He can then select the insurance company which offers the best terms pertaining to premium, Policy and insurance amount.

A person doing well in his profession would not realize the importance of professional indemnity insurance.  But taking a professional indemnity insurance policy would protect him against future losses caused due to any acts of his which could cause losses to a third party.