Is there any difference between professional indemnity and professional liability?

The meaning of professional indemnity and professional liability is the same. Sometimes it is also known as malpractice insurance or error and commission insurance.

Is professional indemnity insurance mandatory in India?

No, it is not mandatory to buy a professional indemnity insurance plan in India.

What factors are taken into consideration to calculate professional liability insurance?

Listed below are the factors that determine the cost of a professional indemnity insurance policy: Type of business or profession Location Policy coverage Claim history Years in business Number of employees

What does the “limit of liability” mean in professional liability insurance?

It is the maximum amount that an insurance company will pay you as compensation in case of loss or damage. In other terms, it is known as the sum assured.

Who should buy a professional indemnity insurance plan?

Any company or organisation providing professional services to its clients can buy a professional indemnity insurance policy.

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Professional Indemnity Insurance

Sometimes mistakes can happen when providing professional services, resulting in financial constraints for you. If you deal in professions like teaching, accounting, consulting, doctorate, and other professional jobs, you can financially secure yourself against mistakes that happen with a professional indemnity insurance plan. Keep reading to find out more about it!

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What is Professional Indemnity Insurance?

A professional indemnity insurance plan protects businesses and professionals who provide advice or services. This can either be a lawyer, accountant, or doctor. The policyholders can claim their policy in case they face any financial loss due to their clients. Let’s understand professional liability insurance with the help of an example:

Suppose an architectural firm promised to complete the project by a set date. But, due to some reasons, the company was not able to do so. As a result, the client sues the company for not keeping the promise. Since the company was covered under the professional liability insurance policy, the insurer pays the legal fees and bears all the other expenses related to them.

To put it simply, a professional indemnity insurance policy covers financial losses arising due to mistakes made by the policyholder and the legal costs associated with them.

Benefits of Professional Indemnity Insurance

Following are the benefits of professional indemnity insurance:

Protection against legal liabilities from errors, omissions, or negligence in professional services.
Covers client’s financial losses and legal expenses resulting from professional negligence.
Reduce financial risks for professionals and provide peace of mind.
Enhances professional reputation and trust with clients, leading to increased business opportunities.
Allows professionals to focus on delivering quality services without worrying about potential legal disputes.

Frequently Asked Question

1
Is there any difference between professional indemnity and professional liability?
The meaning of professional indemnity and professional liability is the same. Sometimes it is also known as malpractice insurance or error and commission insurance.
2
Is professional indemnity insurance mandatory in India?
No, it is not mandatory to buy a professional indemnity insurance plan in India.
3
What factors are taken into consideration to calculate professional liability insurance?
Listed below are the factors that determine the cost of a professional indemnity insurance policy:
- Type of business or profession
- Location
- Policy coverage
- Claim history
- Years in business
- Number of employees
4
What does the “limit of liability” mean in professional liability insurance?
It is the maximum amount that an insurance company will pay you as compensation in case of loss or damage. In other terms, it is known as the sum assured.
5
Who should buy a professional indemnity insurance plan?
Any company or organisation providing professional services to its clients can buy a professional indemnity insurance policy.