Professional indemnity insurance, also referred to as professional negligence insurance and PI insurance, is a form of insurance policy that covers individuals or businesses that provide advice or services to clients in the event of errors that cause financial loss to a client.
Make sure you are protected as professional by having professional indemnity insurance as a part of your business insurance plan.
Table of Content
What is professional indemnity insurance?
Professional Indemnity insurance will cover businesses and individuals costs against claims brought against them by their clients arising out of:
Many industries require workers to have their own professional indemnity cover.
Any business or sole trader who is at risk of any of the above should consider professional indemnity insurance to protect against any unexpected legal bills.
Who needs professional indemnity insurance?
Many professional bodies in Ireland such as the Irish medical council and the Irish law society mandate that their members have their own professional indemnity insurance in place.
Without the cover in place and specific requirements being met such as a minimum amount of indemnity in place as part of the policy, someone cannot practise as a solicitor or doctor in Ireland.
However, it isn’t just traditional professions like law and medicine that require professional indemnity cover, any self-employed person who provides advice, services or handles a clients personal data can be covered by professional indemnity insurance.
Increasingly businesses are insisting that the individuals and firms they work with have professional indemnity cover in place before entering into a consulting relationship.
The following professions can benefit from professional indemnity insurance;
Is professional indemnity insurance a legal requirement in Ireland?
Some professional bodies such as the law society and the Irish medical council mandate that professional indemnity insurance is a requirement for their members to register but for most professions it isn’t a legal requirement.
Certain professional bodies such as the Irish Association of Social Workers strongly recommend to their members that they have the cover in place.
What is the professional indemnity limit?
This is the amount the policy will pay out in the event of a claim. For medical and legal practitioners this can be as much as 10 million euro or more.
The Professional Indemnity limit is usually calculated on the size of the business and the value of the commercial arrangements the business is normally involved in.
What is an occurrence vs claims based policy?
An occurrence based policy is a type of cover which will pay out in the event of a historical claim event after the policy has expired. This type of cover is very common in certain professions such as medicine.
For example, if a medical practitioner had an occurrence based policy in place from 1980-2000 and a claim for loss or damage that took place in 1998 is made in 2005 ,then the practitioner would still be covered by the policy even though the policy ended in 2000 i.e the practitioner stopped paying the premium in the year 2000.
A claims based policy will only cover the insured during the policy and does not include cover for after the policy has expired.
A claims based policy works on when the claim is filed rather than when the alleged negligence occurred.
The occurrence based policy provides more expensive cover but is generally more expensive.
What does professional indemnity insurance cover?
Each policy is unique to the particular business and the types of professional services offered to clients. Normally legal costs in the event of a claim against by a client and also compensation to clients can also be included.
However, professional indemnity policies can provide protection in the following situations:
Breach of Confidentiality
If you are in charge of a client’s sensitive data and a breach occurs you can be held liable. A professional indemnity policy can cover you in this situation.
Breach of Copyright
Breaches of copyright claims are increasingly common and can be expensive in the event of a claim. Ignorance is not a defense and an unintentional breach can be viewed the same as an intentional one.
Libel or Defamation Claims
If you publish a statement that damages the reputation of a person or company you can incur extremely high costs. The PI cover can provide cover for your legal costs.
Defence Costs for Claims Under Data Protection Legislation
With data privacy legislation evolving quickly it can be easy to unwittingly breach the legislation which can result in extremely high financial penalties.
If a claim is made against you for a data breach a professional indemnity insurance policy can protect you against most of the costs incurred.
Who provides professional indemnity insurance in Ireland?
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How much cover do you need?
The value of the sum insured varies greatly depending on the nature of the business or individual being covered.
Some medical practitioners such as gynaecologists are covered for 30 million euro.
Speak with Qualified Financial Advisor today to find out how much cover you need.
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