What is professional indemnity insurance?


Professional indemnity insurance is another name for professional liability, or professional negligence insurance. Professional indemnity insurance protects professionals who work in certain areas and stand a higher risk of being sued due to incidents arising out of their occupation.

Who is professional indemnity insurance for?

People such as physicians, lawyers, architects, insurance agents, real estate agents, stock brokers whose occupational mistakes could cause their clients financial losses, property damage or bodily injuries, can purchase professional indemnity insurance to indemnify them for any damages that they are obligated to pay in the potential event of being found guilty of professional negligence or malpractice. Since all the above-mentioned professions are significantly prone to being sued for malpractice, professional indemnity insurance is specifically designed for them.

Types of Professional Indemnity Insurance

Although professional liability policies can vary significantly from provider to provider and are in no way uniform, there are two common policy types that are worth mentioning.  It is also important to note that professional indemnity insurance does not cover liability other than that which occurs in professional conditions.

Errors and Omissions Insurance

Specifically designed for protecting people holding positions in which they have the highest legal duty of care for others. These include people whose job it is to provide legal, financial, property, etc. advice to their customers, such as financial consultants, brokers, real estate agents, insurance agents, lawyers, also engineers and architects. Professional negligence can arise out of errors and omissions of the people holding those positions, and errors and omissions insurance is the only way they can receive protection against professional liability.

Physicians Professional Liability Insurance

Healthcare professionals can buy this type of professional indemnity policy to protect themselves against liability claims arising out of a medical incident caused by them. There are two coverages that medical professionals can buy:

  • Coverage A specifies the conditions in which the insurance provider will indemnify the professional in the event that a patient files a medical malpractice claim in court - usually, there has to be a medical accident that has directly caused the injuries.
  • Coverage B is the best option for surgeons since it provides protection against group liability.
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