Professional Indemnity
Professional indemnity insurance is a type of liability insurance designed to protect businesses and individuals who provide advice or expertise to third parties.
Even if you are an expert in your business, mistakes happen. And if your client or customer thinks a mistake in your professional services caused a financial loss, they can sue you. Professional liability insurance helps cover you and your company if you make a mistake in your professional services. This coverage is also known as errors and omissions insurance (E&O) or in some countries as professional indemnity insurance.
Common type of Professional indemnity
- Professional negligence
This occurs when you make an error while doing a piece of work for a client. For instance, if an engineer designed a heating system for a large hotel reception room but did not consider its size adequately, meaning the installed radiators did not heat the area sufficiently and the system had to be removed and redesigned.
- Loss of money or goods
Should your client entrust you with money or goods which you subsequently lose, they could sue you. A typical scenario would involve a shoe mender being entrusted with a customer’s shoes: they are legally liable for the safe storage and return of the shoes.
- Losing documents or data
When business documents and data are lost, companies risk their trade secrets falling into their competitors’ hands. If an IT contractor loses confidential information, a claim could be made against them.
- Defamation: libel and slander
Libel and slander insurance covers you against a law suit should someone feel that you have written or said something defamatory about them that is also false. Slander is the term for anything that has been spoken and libel for anything written.
- Breach of copyright or confidentiality
Accidental use of another’s intellectual property can be an expensive mistake. If a graphic designer uses a font without permission, they are breaking copyright law and could be sued.