Professional Indemnity Insurance (PI)

What is professional indemnity (PI) insurance?

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Professional indemnity (PI) insurance is a commercial policy designed to protect business owners, freelancers and the self-employed if clients claim a service is inadequate.

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Any organisation which provides a professional service or gives advice could be sued if the recipient is unhappy with their work. A customer might say you were negligent, delivered the wrong training or made a mistake which cost them money.

Professional indemnity cover, also known as professional liability insurance, is designed to safeguard service-based enterprises, come what may. As a professional, you take pride in doing great work, but if disagreements occur, this cover handles the cost of putting things right – including legal fees.

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What does PI insurance cover?

Professional indemnity insurance is often explained in terms of what might go wrong – but what does it cover? Inpro Insurance Brokers can provide by Professional indemnity policies up to 3 million euros for legal fees or compensation costs. If your business makes a costly mistake – or a customer claims it has – then this financial assistance can help you to survive and thrive beyond the court case.

Professional indemnity cover also provides industry-specific policies for tailored protection. As your business grows, we’ll help you to cover indemnity risks along the way. Professional liability insurance helps in a wide range of scenarios such as professional negligence claims, data loss claims and allegations you’ve given poor business advice.

The primary reason for professional liability coverage is that a typical general liability insurance policy will respond only to a bodily injury, property damage, personal injury or advertising injury claim. Other forms of insurance cover employers, public and product liability. But various professional services and products can give rise to legal claims without causing any of the specific types of harm covered by such policies. Common claims that professional liability insurance covers are negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.

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Inpro Insurance Brokers samples:

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IT SECTOR

If a software product fails to perform properly, it may not cause physical, personal, or advertising damages, therefore the general liability policy would not be triggered; it may, however, directly cause financial losses which could potentially be attributed to the software developer's misrepresentation of the product capabilities.

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SECTOR OF DESIGN

If a custom-designed product fails without causing damage to person or property other than to the subject product itself, a product liability policy may cover consequential damages such as losses from business interruption, but will generally not cover the cost to redesign, repair or replace the failed product itself. Claims for these losses against the manufacturer may be covered by a professional liability policy. Professional indemnity insurance only covers events which have occurred since you’ve held such a policy. This is called a retroactive date.

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CONSULTANTS SECTOR

Consultants face many day-to-day risks, but not having professional liability insurance adds an additional risk of lawsuits. Without coverage, you can face expensive attorney fees, Court costs and defense expenses.
There are many professional liability risks you face as a consultant. These examples show some of the common ones we cover:

• Giving bad advice to a client that results in them losing money. For example, if you try to help a client increase their sales but your plan causes them to lose revenue, they can sue you.

• Not completing a job according to the agreed upon terms. Let's say you own a market research firm. You give your client advice based on research your firm conducted, but it causes them to lose money. Your client sues you after finding out the research was flawed.

• Forgetting something in the services you provide. If you forgot to do a job that your client expected, they can sue your business.

 

When should I take out professional indemnity insurance?

On the assumption that your business needs PI insurance, that you offer advice or professional services for example, then you should consider buying a policy from the first day you start trading to cover any room for error from day one.

When buying a policy, one question you will be asked is from when you want the policy to run. If you have an existing PI policy in place, you should tell the new insurer the date that existing policy started – this becomes the “retroactive date”. The new policy will then start (the “inception date”) and work done before the inception date with the new insurer, all the way back to the retroactive date, will be included.

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