Professional Indemnity

Professional Indemnity

Professional Indemnity insurance is a financial lines product, which is part of the suite of the general insurance products available on the market. A typical professional indemnity policy will cover your liability arising from a negligent act, error or omission committed by you. Many policies now also cover your civil liability.

Being a financial lines product the policy is underwritten on a claims-made basis and not on a claims-occurred basis. This means that the policy which will respond to the claim is the one that is in force when a claim is made upon you and not the one when it occurred. It is extremely important that you fully understand this principle as failure to report a claim within the correct policy year, can result in you not being granted indemnity.

Who does it cover?

The policy will normally cover the company, business or firm, its directors, principals, officers and employees for breaches committed by them of a professional nature. Some policies can also extend cover to include contractors that are engaged by the insured, to undertake activities or service solely on the behalf of the insured.

What can it cover?

The policy covers the insured against claims made upon them arising from a breach of their duty of care arising from a civil liability, act, error or omission, which results in another party sustaining economic loss, property damage or injury.

Not all professional indemnity policies cover bodily injury or property damage, but those that do, will normally make it a condition that the injury or damage had to arise from a breach of professional duties or services.

In addition the policy will respond to defend you against a claim for which you deny any wrongdoing.

The policy will cover the solicitor and legal costs incurred to defend your good name.