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Professional Indemnity Insurance for
Organizations that Provide Professional Advice
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Professional
Indemnity Insurance covers individuals or organizations
that provide professional advice to their clients. The
liability cover comes into picture when such advice leads to
a loss (financial or otherwise) to their client and the
client files a negligence or damage claim. Professional
Indemnity Insurance can be opted by several professionals or
professional organizations such as financial advisors,
financial planners or professionals, private bankers,
Accountants, engineers, medical professionals, consultants,
etc. A claim can be due to a failure to perform, financial
loss incurred by the client as a result of a professional's
advice, etc. hence any industry or individual that delivers
a product or provides a service that a client is dependent
upon should opt for the professional indemnity insurance.
This kind of insurance policy ensures that these
professionals are protected and covered against any legal
action by their clients for the advice provided.
Professional indemnity insurance is a mandatory requirement
by law for certain professions such as legal and medical and
sometimes is made a mandatory requirement as part of a
business agreement by beneficiaries. Professional Indemnity
is referred to with different names such as errors &
omissions, malpractice insurance, etc. This insurance covers
any financial liability and compensation that might have to
be paid in case of losing a lawsuit. Professional Indemnity
Insurance typically needs to be renewed even after you
retire from your profession as the claim may arise because
of your advice while you were in service. Also, changing the
professional indemnity insurance provider is not recommended
as the providers do not cover the claims that arise due to
an incident that occurred while you were with a different
provider. Hence, a detailed review of the terms and
conditions, offerings, cover limit, premium amount, etc. is
critical before procuring a policy. Professional liability
insurance does not cover criminal prosecution and other
forms of legal liability.
Professional liability or indemnity insurance has been
introduced to cover against wrong advice, negligence,
misrepresentation, failure to perform to the part, etc.
which are not covered by other insurance policies such as
liability insurance. Typically, the professional indemnity
insurance policies are based on claim to claim basis and
cover claims only occurred during the period of the policy.
Any lapse in coverage due to the non-renewal of the policy
before the expiry date will not cover professionals for
those gaps in renewal. However, backdating the coverage
might be possible in cases where the renewal was not
possible due to medical condition of the individual, a
natural disaster, etc. It also requires a valid explanation,
authorized warranty letter stating no pending claims, etc.
Typically a gap in coverage is not completely understood by
several individuals. Many of them think that if they are not
performing any professional activities, they do not require
a cover. However, if a claim is made during this gap for a
professional activity performed earlier the individual is
not covered and there will be no benefits that can be
claimed. Hence, it is recommended to take a professional
advice before opting for, renewing or terminating
professional indemnity insurance. |
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