What is Covered Under a Professional Indemnity Policy?

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Professional indemnity insurance is often called professional liability insurance or even just PI insurance. It can cover all legal payments and fees incurred in the person’s defense. More precisely, it covers costs in a case where a business or the employer  is sued by the client for some mistake that they done in their work.

Those compensation payments will include the financial loss that the client had. There is a wide range of potential risks that PI insurance can cover. Unfortunately, even small mistakes in work can lead to very huge debts, however, this insurance is there to protect the business. If you are looking for provided insurance for your business, you can check laib.com.au

What can Professional indemnity insurance cover?

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There are different things that professional indemnity insurance can cover. Therefore, if you make any mistake at the work, you do not have to worry a lot about it. More precisely, PI insurance can cover things including professional negligence, loss of documents or data, and unintentional breaches of confidentiality or copyright. Therefore, if it happens that you are passing on confidential client data and you accidentally copy the wrong person into the email, you will not have to worry about the consequences.

On the other hand, you may be some architect who is working on designing some house and if you make any mistake in creating the plan and something happens later to the house, this PI insurance cover will keep you protected legally.

This counts for any damages in the house or even the collapse of the whole house.  As you can conclude, in both of the mentioned cases a person will be suited by the client for the damage that person caused. Moreover, the damage can be incredibly huge. However, little errors can happen by accident and lead to huge problems. The good news is that with this PI insurance, all the compensation payments and fees will be covered.

The insurance will cover all the financial loss that the client has suffered because you made the mistake while you were working. However, keep in mind one thing. This PI insurance will definitely not cover you for the costs of reputational damage that your accidental failure caused. In the further text, you will find out more advantages of this PI insurance and the things that it may cover.

Professional indemnity insurance and bodily injury

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The range of things that professional indemnity insurance can cover is wide. One of the very important things that PI insurance can cover is third-party compensation for any injury that a client suffers from. However, this counts only if that injury is caused by your negligence while you were working.

Therefore, if the client was injured while you were performing your business, the PI insurance will cover all the financial losses, as well as the injury of the person and even the property damage.

Logically, all of the mentioned things are covered if they are a result of your mistake or negligent act while you are conducting your professional duties and working with that client. In some other cases, where you are not the direct actor and your working performances did not cause the damage when the person is injured, the damage will cover public liability insurance.

For instance, if the person is slipped over in your office and falls down. On the other hand, if some of your employers got an injury at the workplace then there is special employers liability insurance that will cover the injury costs.

Professional indemnity insurance and the consequential loss

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The consequential loss is a financial loss that the client suffered due to some professional mistake or negligence on the work. When it comes to this, it is also covered by PI insurance. However, this can vary in different cases so we suggest you check your policy documents and make sure that it is covered.

It is important to know that even though your PI insurance covers consequential loss, there are going to be some special exclusions that you need to understand. For instance, in the case that consequential loss is caused by a computer virus, it will not be excluded. There are some other cases like this one, so you should pay attention and check about your particular case.

Professional indemnity insurance and contractors

If you are running your business and you have employees, you should make sure that the insurance policy document all of them and their personal details. This counts for every employee’s type, even though they are contractors. If the insurance notes them, all of their mistakes can be covered. In other words, if some of them make the mistake accidentally in their working place, the PI insurance will cover the financial costs that resulted in a compensation claim from the client.

Also, do not forget that you also need to cover compensation claims made by your employees if they suffer from some injury or illness caused by the work. In that case, you will need employers’ liability insurance. All the businesses that have their own employees have this legal contract that will cover all the potential risks that can happen to them.

Professional indemnity insurance and defamation

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Defamation refers to something that is even written or spoken that can harm anyone’s reputation and that defamation is proven not to be true. If you are wondering whether PI insurance can cover something like this you should check your personal insurance policy document. However, in many cases, they are covered.

Professional indemnity insurance and budget overruns

In case that your client claims that you made a mistake while you were working with him and your mistake led to budget overruns which resulted in a compensation claim, it can be covered by the PI insurance. However, this can be a very complex thing so you should check your insurance policy document whether they are covering even these types of things.

Professional indemnity insurance and breach of contract

There is one more thing you should know and it refers to the fact that your PI insurance will not cover the financial costs and expenses if you have been sued by a client for breach of contract. Unfortunately, contractual liability is absolutely excluded from this cover type.

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