Professional Indemnity Insurance

Wednesday, April 10th, 2024
Author: Fiona Borg, CMIRM Dip.CII CBCI Chartered Risk Professional


Newsletter Q2, 2024

In today’s world, people search for peace of mind to ensure a smooth running of their business operations. This includes the security of the business finances which can be easily tarnished if a case against the professional takes its course and is found legally liable.

There are various reasons why an individual acting in his professional capacity benefits from having a Professional Indemnity Policy in place and we will go through some of these benefits below. Firstly, let’s have a look at who are the persons who should invest in such a policy.

Normally, such policies are intended for professionals such as Accountants and Auditors, Lawyers and Notaries, Architects and Engineers (Civil, Electrical and Mechanical), and professional people in the Health Sector, Dentists, Physiotherapists, General Practitioners, etc. However, such policies are also purchased by companies, such as Insurance Brokers, Consultants, Stockbrokers, and Corporate Service Providers, who offer advice to their clients.
The primary cover when issuing a PII policy is the cover for costs and expenses in defending a legal claim. In addition, the policy will indemnify the insured person for any damages which one becomes liable to pay for negligent actions, errors or omissions.

Policies provide protection for cases resulting from defamation or libel claims. One needs to be careful as with social media, it is much easier to spread negative or slanderous information.

Another reason why a person or a firm issues a Professional Indemnity Policy is because of a legal requirement requesting the professional, to issue a policy with a specific minimum limit of liability. In this regard, it is important for the person to ensures that the policy being purchased is in line with the requirements of the law. Apart from the regulatory requirements, there is also the contractual requirements. As an example, today, professionals entering contracts with their clients such as an Architect entering contracts with a Government Authority will be required to present a Professional Indemnity Policy prior to the inception of the works.

Today, you can also find PII Policies for the tech industries whilst designing software, games and other technological products.

In order to purchase such a policy, it is normal that one is requested to complete a proposal form with all the details including any circumstances which you may be aware of that may lead to a claim in the future. This is very important as the cover is on a claims-made basis.

Likewise, one would highly recommend that a retroactive cover is purchased since if there is a change in Insurer and something happens the new insurer will only pick up claims of a circumstance happening in the previous years that were unknown at the time the policy was purchased. Normally, if a case is known, it will be excluded from the policy.

On the other hand, if a professional is retiring from his business, or ceased operations, one would suggest a run-off cover for any claims arising after the business is no longer in operation.

Be Protected, Today for Tomorrow.

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