Indemnity Insurance Explained: Why Do You Need It?

Indemnity Insurance Explained: Why Do You Need It?

 

There are times when no matter how much you do your best at your field, something could go wrong. It may either be caused by an error in judgment, pure allegations, or an honest mistake. We’re humans after all. However, most of the time, an apology is not enough to counter these things. You have to defend yourself against the allegations or claims and it can cost a lot, especially if you’re really found to be at fault in the end of the process. The good thing is, you can protect your business or yourself from big losses when you have professional indemnity insurance in Australia.

What is indemnity insurance?

Indemnity insurance is a type of coverage in which the insurance provider guarantees compensation for a policyholder's losses or damages. This type of insurance aims to protect professionals and business owners from unexpected damages or losses caused by claims of negligence, breach of duty, error or omissions and other allegations.

That said, almost everyone who provides professional service or advice, no matter how big or small your business may be, can benefit from getting professional indemnity insurance. Whether you’re a doctor, lawyer, accountant or even IT specialist, you are prone to allegations and claims of breach of duty so better be safe than sorry with professional indemnity insurance.

What is covered by indemnity insurance?

Like any other type of insurance, the indemnity insurance has certain areas of coverage. Typically, indemnity insurance covers the following expenses:

1) Legal fees

Most of the time, you have to defend yourself in the court against any allegations of breach of duty, error or omission, or negligence. Your professional indemnity insurance should be able to cover the expenses associated with investigations, court attendance and defence, and even settlements.

2) Civil liabilities claims

Allegations of breach of duty can result in unintentional damages such as infringement of intellectual property, defamation, and loss of or damage to documents. Depending on your plan type, these should also be covered by your indemnity insurance. 3) Reputation management expenses Following allegations of breach of duty, you may want to engage with experts or public relations consultants to prevent further damage of your reputation. This can be costly, especially if you want to engage with top-tier specialists. But your insurance can also cover this.

4) Bodily injury directly related to breach of duty

The expenses associated with injuries that may arise by professional services covered by the policy should be covered by your insurance.

So what’s not included in indemnity insurance coverage?

Depending on your plan type, professional indemnity insurance does not cover the following:

1) Bodily injury not directly related from a breach of duty

Indemnity insurance only covers bodily injury caused by professional services covered by the policy. For example, if you’re a doctor and got involved in a car accident, your indemnity insurance will not be able to cover for the damages.

2) Claims made before being insured

Like other insurance types, indemnity insurance is not retroactive. Meaning, it will only take effect during the period of insurance as specified in your policy. Make sure you protect yourself right away by getting insurance.

How to get indemnity insurance and how much does it cost?

Every business or professional is unique so the cost to get insured also varies for each. For instance, there are some occupations that need a certain limit of Professional Indemnity insurance coverage to operate by law.

To get professional indemnity insurance, you may contact your trusted brokers and they’ll help you find the right solutions for you. They’re also able to guide you through the claims process.

Protect your business from damages caused by breach or duty

Allegations or honest mistakes can hit you at any time. Protect your business as early as now by getting an insurance tailored for your business. Our insurance brokers at SK Insure have a deep understanding of the Business and Personal Insurance market, offering long-standing relationships with leading insurance companies.

Contact us today to get started.