collaborative post // If a customer sues a company over an error they made while working on a project, professional indemnity insurance may be able to cover compensatory damages and legal costs. The loss of revenue that the customer has endured will often be considered in the compensation award.
Professional Indemnity Insurance: What is it?
You want to safeguard your company as much as possible as a business owner. Professional indemnity insurance, commonly known as PI insurance, protects you if a client or customer asserts that your service, advice, or design was subpar, did not meet expectations, or caused the client to suffer financial loss.
For example, professional indemnity insurance from Markel Direct company would pay for any legal fees and other costs associated with defending yourself and any costs or damages that could be granted to your client.
What does it Cover?
A wide range of possible dangers can get covered by professional indemnity insurance. In addition, professional indemnity insurance can assist in protecting your company against seemingly little mistakes that might cost a lot of money.
Professional indemnity insurance might cover your errors, such as professional negligence, inadvertent violations of secrecy or copyright, and loss of papers or data.
For instance, you can send confidential customer information through email when you unintentionally copy the wrong recipient. If you’re an architect, for example, and you make an error in the designs, the house you’re creating will eventually collapse. You risk having your customer sue you in both scenarios. In addition, the financial damage the customer has endured due to your error will often be considered when determining the compensation award.
Body damage: Does professional indemnity insurance cover it?
Only if the injury was brought on by your carelessness while carrying out your professional responsibilities will professional indemnity insurance be able to pay for third-party damages for bodily injury. For instance, professional indemnity insurance from Markel Direct protects against monetary loss, physical harm, and property damage brought on by your negligence while working for a client.
However, you would want public liability insurance to support a claim for damages for injuries if, for instance, someone tripped over in your office. Additionally, it would help if you had employers’ liability insurance to pay for worker harm claims.
Does consequential loss get covered by professional indemnity insurance?
In professional indemnity insurance, consequential loss refers to a monetary loss endured by your client that is unintentionally brought on by your error or professional negligence.
Although you should verify your policy paperwork, professional indemnity insurance occasionally covers the consequential loss. However, there will often be specific exclusions even if your professional indemnity insurance does protect against catastrophic loss. For instance, a computer virus-related significant loss will usually be disregarded.
Knowing when and how to submit a claim for professional indemnity insurance might be challenging. Generally, you should file a claim if a client or customer has a grievance that cannot be quickly resolved. In specific circumstances, a refund or modifications to the service may be required.