Risk is a big part of our day-to-day lives, both in a personal and professional capacity. While you may not be able to eradicate all potential hazards, there are steps you can take to protect yourself against the harmful effects they can have.
Where businesses are concerned, professional indemnity (PI) – or professional indemnity insurance (PII) as it is also known – is a big part of this. Here we look at the truth surrounding this vital insurance and reasons why you need to invest in it.
What does it protect?
PI is a form of liability insurance essential to a number of different businesses and industries. It is designed to help professions which offer advice and services deal with the cost of defending a negligence claim or with the damages from a civil lawsuit.
Known as error and omission (E&O) in the USA, the insurance primarily focuses on protecting service providers in the event that there is anything missing or incorrect in the services they provide.
A failure to perform adequately and being responsible for financial loss are also covered.
What professions can benefit?
Naturally, advice-based professions are covered by the policy and that means it is vital for legal firms, solicitors and advisory bodies. In fact, PI is so important that the Solicitors Regulation Authority (SRA) requires legal firms to have this insurance in place.
Recent news detailed how firms unable to get qualifying insurance are able to apply for an extended indemnity period (EIP) of 30 days within which they can continue to practice while they seek new insurance. Once obtained, this insurance must be backdated to cover the length of the EIP.
Alongside legal firms, medical professionals can also benefit from PI due to the delicate nature of their jobs.
Accountants, consultants, charities, brokers and town planners are other examples of professions which can benefit from it.
What can happen if I don’t have it?
Failure to obtain this insurance can result in numerous problems. Certain professions need the insurance in place in order to practice their trade while for others it is needed simply to protect them from potential harm.
Practicing certain jobs without the necessary insurance can even lead to suspension from work and potential legal action.
A story from October 2013 detailed how gynaecologist Dr Ihimire Paul Okoje was given a conduct hearing that resulted in a four-month suspension after he was found guilty of carrying out surgical procedures without relevant insurance.
Professional indemnity insurance (PII) is therefore an incredibly valuable commodity – and one your business simply cannot afford to go without.