When we ask businesses about their insurance plans, things like employers’ liability, building and contents, or business interruption coverage may come up. If you mention professional indemnity insurance Malaysia, they can struggle to explain what it is or why you would need it. We’ve answered businesses’ frequently asked questions regarding professional indemnity insurance to help you understand what it is and why you might need it.
What is professional indemnity insurance?
If it is ruled that you were responsible for your client’s financial loss due to your lousy advice, services, or designs, professional indemnity (PI) coverage will pay your legal fees and other defence costs, as well as any compensation that may be required.
Who needs professional indemnity insurance?
Because it is a requirement of their governing authorities, some professions require PI coverage before they may perform their duties. Examples of such occupations include accountants, architects, IFAs, insurance brokers, solicitors, and surveyors. While many choose this coverage due to its protection and security if their advice or service falls short of a client’s expectations, some professionals are contractually compelled to obtain PI. Establishing PI can be crucial in securing new clients and reassuring current ones.
Although you try to avoid mistakes in business, they occasionally happen. If your client claims they have suffered one of the following losses, PI insurance will defend you and your company.
- a negligent breach of contract or a violation of a professional duty of care
- accidental violation of privacy and copyright
- loss of data or documents
What does professional indemnity insurance cover?
This solely depends on the policy, therefore you’ll need to make sure it offers sufficient protection for the expert service your firm offers and any potential hazards. This could, for instance, include:
- civil liability (such as damages and costs) for breach of duty
- legal costs and expenses in defending a claim
- helplines to help you manage risks
- relevant regulatory body requirements
How much is professional indemnity insurance?
Business to business will have different PI insurance costs. The insurance will take into account many things, such as:
- the level of cover
- number of employees
- annual turnover
- risks associated with your industry
- There is no average PI insurance cost.
What qualities should I consider before selecting a professional indemnity insurance company?
There are numerous companies that provide PI insurance. However, some of these will provide services that are more appropriate for your line of work and the size of your company than others. When selecting an insurance, it’s important to have the following in mind:
Can you modify the policy to meet your needs?
If this is the case, you might be able to avoid adding a premium for coverage that you don’t require.
Does the provider comprehend your company’s needs?
Given how intricate some of the risks are, it is advisable to work with a broker that has knowledge and experience in professional indemnity insurance. Having the appropriate amount of security in place and just paying for what you require rather than what you do not will be make possible by working with a PI specialist.
Is it possible to make monthly payments?
This is a fantastic choice for start-up companies that are still concerned about cash flow.
Typically, PI is providing on a “claims made basis.” This means that only claims made when a policy is in effect and has been in effect continuously will be covered by your insurer. As claims may arise years after the completion of the work, it is crucial to maintain coverage. To safeguard yourself against liability claims, always keep track of the dates of your insurance renewal and stay current with the provisions of your policy.
Run-off insurance is important for professionals and may be require to join the ICAEW (ICAEW). Run off insurance protects you against future claims after you cease practising for a set period.
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