Professional Indemnity insurance provides cover for third party claims against businesses providing professional advice. Cover is for both defence costs and third party damages if awarded.
Historically, the provision of professional advice was given a fairly narrow definition with cover offered just to doctors, lawyers, accountants and the like. These days, however, it is given a much broader definition and many different types of businesses now take up this cover, including hairdressers, training organisations, real estate agents, event organisers, private investigators and many more.
The primary intent of professional indemnity is to provide cover for claims alleging financial loss due to the professional advice provided by the policy holder. Most insurers (but not all) usually also include cover for personal injury and property damage arising from professional advice. This is necessary because the majority of Public & Products Liability policies specifically exclude claims arising from the provision of professional advice.
The broader Professional Indemnity policies include cover based on civil liability so offer cover for claims alleging breach of the Competition & Consumer Act 2010 (such as misleading and deceptive conduct), defamation, inadvertent intellectual property infringement, and loss of documents.
It is extremely important to be aware that Professional Indemnity policies are always written on a claims-made basis. This means that you need to have a policy in place at the time you are notified of a claim against you. If you cancel a Professional Indemnity policy, you generally have no cover for any claim notified to you from that date on, even if you did have a policy in place when the alleged incident took place.
There are dramatic differences in the level of cover provided by various insurers and it is therefore very important that you seek the advice of an insurance adviser to ensure you are getting the cover you need.