What does a professional indemnity insurance policy cover?

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The short answer is: it varies from policy to policy.

In broad terms, a professional indemnity (PI) policy will protect you from the financial consequences of an alleged breach in your professional duties – provided that breach was not intentional.

What PI protects

If someone with whom you have an actual or assumed contractual relationship believes you have done – or failed to do – something that has harmed their interests, they may pursue you for compensation. Should this happen, professional indemnity insurance can protect you in a number of ways. A standard PI policy will fund your legal defence costs and any award subsequently made against you – up to the policy limit.

For example…

Examples of how such allegations can arise would include: a solicitor who misses the filing deadline for a law suit, an accountant who fails to identify fraud when auditing company accounts, an architect who wrongly specifies structural elements, or a surveyor wrongly valuing a property.
In each of these scenarios, it is easy to see that the client would have genuine grounds for grievance. But a PI policy will also protect you, even if a complaint or lawsuit is groundless.

The Devil is in the detail

Beyond these general outlines, however, PI policies vary widely in the coverage they offer. Some cover all contractual obligations. Others require that the alleged breach of professional duties constitutes a negligent failure to adhere to the standards expected of a member of your profession.
Available cover limits, deductibles, exclusions and extensions, vary greatly. The important thing is to ensure you select a policy that can cater for the true risks your business faces and that will provide the level of protection you need.

Getting the right PI advice

A specialist broker will be able to advise you on what cover is available to meet your specific requirements.
If you would like a quotation, please call us on 049-4332944, e-mail info@martininsurance.ie or complete our online enquiry form.

Disclaimer: The material contained is this article is for general information purposes only and does not constitute professional advice.

James Martin
James Martin
James Martin has 16 years of experience as a general insurance broker. He is a member of the Chartered Insurance Institute and has completed a Diploma in Corporate Finance.

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