Having a stable job just isn’t enough anymore. Financial stability comes by establishing a business. Most people tend to establish businesses related to their field of expertise, for obvious reasons. One, you can start the business on a part-time basis. You can set your own time and be your own boss. Two, you’re already an expert. It will be easy for you to plan and outline the business.

But being an expert doesn’t guarantee you won’t make mistakes. To protect yourself from complaints for such mistakes, you need to be insured. A perfect insurance for you will be the “Professional Indemnity Insurance” also referred to as indemnity insurance, PI insurance or Professional Liability Insurance.

What’s a Professional Indemnity Insurance (PI Insurance)?

This type of insurance covers you and your business against potential losses incurred or will be incurring for services you had / have provided to dissatisfied clients because of negligence such as unsatisfactory service you or your employees have provided that causes the clients’ loss, either physically or financially, infringement of intellectual property such as copyrights, damage or loss of data of your clients, or thefts you made or by one of your employees.

How will I and my business be covered?

Professional Indemnity Insurance will cover all the costs incurred from the lawsuits filed against you by your client and also, covers the costs you will incur even when you lose.

Professional Indemnity Insurance insures will also provide claims paid to the clients before it results to lawsuits. Prevention is still the key.

Who are eligible for Professional Indemnity Insurance?

Service-related industry professionals like architects, engineers, accountants, financial advisors, private / investment bankers, web designers, marketers, graphic artists, writers, doctors, medical / healthcare professionals, etc. (businesses providing consultancy, contracting, and transport) may acquire Professional Indemnity Insurance.

What can you get from Professional Indemnity Insurance?

Businesses are covered against lawsuits and losses incurred due to the lawsuits or negligence by you or your employees. This is more beneficial for businesses that have several employees or jobs that you can’t monitor on a daily basis.

You are covered even after you have already provided the service to your clients for several years.

Keep in mind that Professional Indemnity Insurance usually covers on a “claims-made basis”. This means, you are only insured as long as the policy exists. Arrange with your insurer to cover new claims upon your retirement or closing of the business.

In the event of changing insurer, you may ask your old insurer to arrange for new claims for previous service (a run-off) or ask your new insurer if they agree to cover that for you (retroactive)2.

How to protect myself from lawsuits or from requiring Professional Indemnity Insurance?

Make a detailed agreement of your services. Outline the responsibilities and duties you will do for your client and their insurance coverage, should there be any. Disclose all the possible problems you’ll meet. Explain everything your client needs to know before rendering the service.

Keep a good filing system and make sure everything is well-documented. Everything you do must be organized and kept somewhere safe.

Be transparent especially with your clients. Documents must be presented to the client and be sure to work on complaints as soon as it arises.

Where can I find Professional Indemnity Insurance Provider?

Look for a Professional Insurance Broker, specializing in Professional Indemnity Insurance, in your area.

Ask your insurance company if they offer such services.

Ask the government agency that deals with registrations and permits of businesses. They often have lists of insurance companies and agencies that provide PI insurance.

You may also go online and browse for PI insurance providers in your area, and ask for quotes for PI insurance.

How much does a Professional Indemnity Insurance cost?

It depends on your coverage (minimum or maximum amount coverage). The insurance rates will probably be around 0.5% – 1% of your coverage.