What is Professional Indemnity?
Professional Indemnity (PI) insurance is a form of Liability Insurance and provides cover for the legal costs and expenses in defending a claim. It also provides compensation payable to a client if you are found to be responsible for providing inadequate advice, services or designs that cause your client to lose money.
Who Needs Professional Indemnity?
- Technology Companies
- Estate Agents
- IT Consultants
- Business Consultants
The above list is not exhaustive. There are literally hundreds of professions that should have the cover. A simple way of thinking of it is: do you provide advice, design, specification or certification? If you do, you have a PI exposure.
Is Professional Indemnity Compulsory?
For some professionals (Solicitors, Insurance Intermediaries), it is set in statute that PI is required. However, whilst it is not a legal requirement for most professionals, their regulatory bodies (Chartered Accountants for example) make it a mandatory requirement of their membership that they carry cover to a certain standard. In addition, some professions require insurers to sign up to Minimum Terms & Conditions. This requires insurers to provide cover and policy to a wording that the regulatory body dictates e.g. The Law Society.
- Solicitor sued for failing to lodge proceedings for personal injury claim in time (missed statute of limitations) – Insurer paid €60,000.
- Accountant sued for miscalculating tax owed to revenue –Insurer paid €35,000.
- Marketing agency omitted a digit from a client’s phone number and left out their web address in a printed advert – Insurer paid €22,000.
- Architect sued by his client for the costs of rectifying a new build house built from a flawed design. Insurer paid €220,500.