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Professional Indemnity Insurance provides financial protection to businesses that provide a professional service to their clients. If a client suffers a significant financial loss as a result of a business’s alleged negligence, the client is likely to seek compensation. Professional Indemnity Insurance will provide cover for the legal fees incurred in the event the business has to defend itself against allegations of negligence, as well as damages payable to the client.
Who needs Professional Indemnity Insurance?
Any business that provides a professional service to customers should consider investing in this type of policy, especially if a claim of negligence is made against a business without the means or the funds to defend themselves in a legal proceeding. Consumers have become far more knowledgeable about how they can deal with poor service, and if a claim is made on the premise that the business did not provide a sufficient service or correct information, the customer has the right to sue the business.
Requirements in the business space
Certain industry bodies in South Africa require a professional to have Professional Indemnity Insurance in place before they are allowed to belong to their specific body or association. This applies to careers such as law, where a newly qualified lawyer must obtain this policy through the payment of their membership fees to the Attorneys Insurance Indemnity Fund (AIIF).
Requirements are also made within the corporate space whereby if a large company decides to outsource services to another company, the outsourced company must prove that they have Professional Indemnity Insurance in place before the contract is accepted. This protects the company from possible lawsuits if the outsourced company provides an inadequate service.
If your company provides a professional service based on skills and expertise, compare Business Insurance quotes on Hippo.co.za to find the right policy that includes Professional Indemnity Insurance.
