PI, or professional indemnity insurance, protects professionals against financial losses arising from claims by clients for errors, omissions, negligence, or breach of duty in the delivery of professional services.

If a client alleges that your advice or service caused them a loss, this policy helps cover legal defence costs, settlements, or compensation, so you do not have to pay everything out of your own pocket.

Choosing the right cover means understanding your profession’s risks, the policy limits you need, and the exclusions you should watch out for, rather than just picking the cheapest option. Here are the steps for professional indemnity insurance policy selection.

Step 1: Understand Profession Risk

To choose the right professional indemnity insurance plan, you need to thoroughly evaluate your professional risk. Knowing where things can go wrong helps you choose coverage that actually matches your work, instead of a generic plan that may fall short when needed.

Step 2: Research Insurance Providers

Once you understand your risk, look closely at the insurance providers offering PI policies. Check their market reputation, claim settlement track record, customer reviews, and ease of the claims process. A policy is only useful if the insurer is reliable and responsive when a claim arises.

Step 3: Compare Plans

Do not settle for the first plan you see. Compare different policies based on coverage limits, inclusions, exclusions, deductibles, and add-on options. Pay attention to what is covered and what is not, especially clauses related to negligence, legal defence costs, and retroactive cover.

Step 4: Disclose All Information

At the time of buying the PI insurance, ensure that you disclose all the information about the scope of work, claim history, services offered, etc., with the insurer. Hiding or misrepresenting details may lead to a claim rejection later, defeating the whole purpose of having insurance.

Step 5: Review the Policy Document

Before finalising the purchase, read the policy document carefully. This will help you understand coverage limits, exclusions, inclusions, and related terms. If anything seems unclear, ask the insurer for clarification rather than assuming it will be covered.

Step 6: Get Expert Advice

If the policy terms feel confusing or your profession involves complex risks, it is wise to speak with an insurance advisor. An expert can help you assess your risk properly and suggest a policy that offers adequate protection without unnecessary add-ons.

Step 7: Purchase Plan

Once you feel confident in the plan and its coverage, you can definitely purchase it. However, do not forget to review the plan periodically, especially if your business grows. This will ensure you remain protected as your business or profession scales.

The professional indemnity insurance coverage may vary based on your profession and the risk involved. Here are some of the core features covered under the plan.

Error & Omission Coverage

The professional indemnity insurance plan provides coverage for claims arising from negligence, mistakes, errors, or omissions in professional duties.

Damages & Settlements

The plan also covers the damages and compensation amount to the client if the court case results in a settlement.

Legal Defence Costs

Another crucial feature of professional indemnity insurance is that it covers legal defence costs, such as lawyer fees, court costs, investigation fees, and more.

Lost Document Cover

The plan also covers the costs of restoring or replacing the client's lost document while in your custody.

Breach of Confidentiality

The professional indemnity insurance plan also covers claims arising from accidental breach of the contract or agreement with the client.

Retroactive Coverage

The plan also includes a retroactive date, which provides coverage for past claims in accordance with the policy conditions.

When choosing a professional indemnity insurance plan, there are certain factors to consider to help make informed decisions.

Policy Type

One factor to consider in professional indemnity insurance is the policy type. Before buying the plan, you need to know if the policy is claim-made or occurrence-based. By understanding this, you will choose a plan that aligns with your profession.

Limits of Indemnity

Another factor to consider is the indemnity limit, which is the coverage limit during the claim. The plan should have sufficient coverage limits to cover the potential claim and legal costs.

Retroactive Date

The retroactive date defines how far back your professional work is covered under the policy. Claims related to services provided after this date are eligible for coverage, even if the claim is raised later. When selecting a PI policy, always choose the earliest possible retroactive date.

Exclusions

Lastly, it is important to understand the policy exclusions. Exclusions list situations and claims that the insurer will not cover, such as fraudulent acts, criminal liability, intentional wrongdoing, or claims arising from services outside your declared scope of work.

Choosing the best professional indemnity insurance policy is crucial for professionals as it offers protection in crises. However, selecting the best policy is not about picking the low-cost option; it requires careful assessment. You need to carefully review your business risks, coverage type, limit, and other details, then choose a plan that suits your profession.

TATA AIG offers a customised PI insurance plan based on your professional risk. Our plan covers a wide range of professions, including legal, healthcare, construction, finance, and more. We first understand your professional risk and then design a plan that suits you.

Our PI insurance plan includes additional benefits, such as a digital buying process, quick policy issuance, minimal documentation, and more. Secure your profession against a myriad of risks with our tailored professional indemnity insurance plan.