The Risks Covered By Professional Indemnity Insurance

Professional indemnity insurance(PII) is a liability insurance which offers coverage when a compensation claim is made by the client for your negligence, omission, breach of contract or unintentional infringement of intellectual property rights.

The client can claim for compensation for any damage (financially or to the brand reputation) caused by your service.

This article focuses on the risk aspects for which the professional indemnity insurance policies are sought after and tips that should be followed while choosing a PII company.

The risk profile of your business depends upon the scale of operation, type of industry and client you are serving. The insurer offers you a policy by analyzing types of advice, products sold and management and other issues related to your business.

The insurer also scrutinizes the areas of your business which are prone to risks but no claim has been made yet. .A thorough review of your past business activities is also made by the insurance company to assess your potentials to defend the future claims.

The factors that are taken into consideration before offering you professional indemnity policy are your adviser/support staff ratio, number of self-employed staffs/freelancers, claim history, volume of past business, the R&D of your business and experience of your staffs.

The payable premium varies from insurer to insurer. However all the insurance companies calculate premium of professional indemnity insurance policies by analyzing total income, required limit of indemnity and level of excess risk profile of the business and nature of the business.

Your check list before figuring out a professional indemnity insurer
  1. Have proper knowledge regarding the credibility of the insurance company
  2. Be sure that the company you are going to deal with has the proper exposure in the PII market
  3. Compare the payable premium of more than two insurers
  4. Ask the insurer if he can offer coverage for your offshore projects
  5. Check the services of the Insurance company
  6. 6Make sure that the company has clients from the sector you are serving