Professional Indemnity Insurance
Professional indemnity insurance protects professionals against claims made against them by their past or present client. Professional Indemnity, also referred to as PI insurance, is available to professionals in different industries and it covers the costs and legal defense costs, as well as any damages payable.
PI insurance generally indemnifies the insured for a claim that is first made while the policy is in force as a result of a breach of professional duty in respect of the conduct of the professional business.
This class of insurance is written on a ‘claims-made basis’. This means that the policy provides cover for claims made during the period of insurance in respect of professional services provided after the retroactive date, subject to the terms and conditions of the policy in place at the time. The retroactive date will be specified in the policy schedule.
All PI insurance policies will have a ‘limit of indemnity’ and a ‘deductible’ or ‘excess’. The limit of indemnity is the maximum amount that the insurer will pay for any one claim.
The deductible applies for each claim such that the amount of each claim up to the deductible must be paid by the insured.
Professionals are legally held to a higher degree of skill than other people and could be considered ‘experts’ in their industry. Therefore, if a client without this expert knowledge, suffers a loss that could be attributed to an experts’ failure to uphold professional standards, the expert risks being sued for a breach of their professional duty. A client’s loss can be material, financial or physical.
Who is Professional Indemnity Insurance For?
The definition of ‘professional’ has expanded in recent years. Due to this, professional indemnity insurance is now held by workers across a wide range of industries. Any professional person providing services is regarded by their client as an expert and is therefore open to a claim being made against them.
Professional indemnity insurance was only considered by accountants, solicitors, medical workers and engineers but this has since changed as it now provides protection for advice and treatment provided by professionals in many industries, including architects and designers, education workers, real estate agents, health workers and consultants.
Professional indemnity insurance is required by certain professionals, including insurance brokers, legal professionals, medical practitioners and some accountants. Professional contractors sometimes need to have professional indemnity insurance.
Professional indemnity insurance policies and conditions will vary depending on your industry.
More Information can be found on our FAQ page.