Professional indemnity insurance (PII), also known as professional liability insurance or errors and omissions (E&O) insurance, is designed to protect professionals from the financial consequences of claims arising from mistakes, negligence, or failure to deliver on their professional services. Here’s how it works:

What PII Covers:

• Defense Costs: Pays for legal expenses associated with defending against claims, even if the claims are groundless.
• Judgments & Settlements: Covers financial awards if you are found liable for damages to a client.
• Negligence & Errors: Protects against mistakes or oversights in the advice or services you provide.
• Omissions: Covers situations where you may have failed to provide a necessary part of your service.
• Breach of Contract: Some policies may cover claims alleging you didn’t deliver services as promised.
• Intellectual Property Claims: Can include protection against claims of copyright infringement or misuse of trade secrets related to your work.

Who Needs PII:

• Professionals Providing Advice or Services: This includes:
  • Accountants and Tax Advisors
  • Architects and Engineers
  • Consultants (management, IT, etc.)
  • Lawyers and Attorneys
  • Medical Professionals
  • Real Estate Agents
  • And many more…
• Client Requirements: Many clients or contracts require professionals to carry PII before working with them.

Why It’s Important:

• Mistakes Happen: Even highly skilled professionals can make errors that lead to client financial losses.
• Lawsuits are Expensive: Defending against claims, even frivolous ones, can be financially draining.
• Protects Your Reputation: PII can help you resolve client disputes fairly, minimizing damage to your professional reputation.

Important Notes:

• Coverage Varies: Policies can be tailored to specific professions and risks.
• Exclusions Apply: Intentional wrongdoing or criminal acts are typically not covered.