Professional indemnity (PI) insurance is designed to protect professionals from financial losses arising from their work. It covers legal costs and compensation if a client claims negligence, errors, or omissions in the services provided.

For example, doctors can use PI insurance to protect themselves against lawsuits related to misdiagnosis or incorrect treatment. In short, the policy helps professionals manage the financial and legal impact of unexpected claims.

Most people wonder if professional indemnity insurance is mandatory in India. The right answer is that it depends on the profession. In India, not all professions require professional indemnity insurance, but some regulatory bodies do. These bodies include:

Institute of Chartered Accountants of India

The Institute of Chartered Accountants of India requires all practising accountants to have a professional indemnity insurance plan. As per the CA regulation, the minimum coverage for the plan is between ₹10 lakh and ₹50 lakh.

Medical Council of India

The Medical Council of India also makes professional indemnity insurance mandatory for doctors, nurses, and other healthcare professionals. The plan is in place to protect them from medical negligence claims.

Bar Council of India

There is no mandatory requirement from the Bar Council of India for lawyers to have professional indemnity insurance. But they do purchase it to avoid the legal disputes and gain client trust. There are certain sections of the constitution where clients can ask for compensation, such as:

• Under Sections 73 and 74 of the Indian Contract Act, 1872, if a party breaches a contract, the other party may seek financial compensation.

• Under the Consumer Protection Act, 2019, consumers or clients can file complaints if the services received are below reasonable standards.

If, for some reason, you do not acquire the professional indemnity insurance even if your profession demands it, then you might have to face the legal and financial repercussions. Here is what could happen if you do not have PI insurance.

Financial Repercussions

Businesses and individuals, if they don’t buy the professional indemnity cover, need to pay for various financial expenses out of their own pocket. These expenses include:

• Paying for Legal Fees: You need to pay for all legal fees, including lawyer fees, court fees, investigation fees, and other fees, by yourself if you do not have a PI plan.

• Damages and compensation: If a lawsuit ends in a settlement or court order, the compensation amount has to be paid by you. In many cases, this amount can be quite high.

• Risk of business collapse: Repeated legal expenses and large compensation payouts can severely strain finances and, in extreme situations, even force an individual or business to shut down.

Professional & Legal Consequences

**Professionals and businesses for whom professional indemnity insurance is compulsory also face legal consequences. These consequences include:

• Regulatory penalties: Authorities or professional bodies may impose fines, suspend licences, or take disciplinary action for non-compliance.

• Client loss: Many clients prefer or require professionals to have PI cover. Not having it can result in lost contracts and reduced trust.

• Reputation damage: Legal disputes and compliance failures can harm professional credibility, making it difficult to attract and retain clients in the long run.

Personal Impact

Not having professional indemnity insurance also results in stress and worry. If professionals and businesses are constantly worried about financial or legal threats from clients, this can create stress that could affect their health.

Professional indemnity insurance is highly recommended for professions that offer advice, design, or services in highly regulated fields. Here are the professionals who should definitely have a PI insurance plan.

Healthcare Professionals

Doctors, surgeons, dentists, and other healthcare providers are directly involved in patient health and safety. Even a small error, a delayed diagnosis, or an unexpected outcome can lead to legal claims. Professional indemnity insurance helps cover legal costs and compensation related to allegations of medical negligence.

Legal Professionals

Lawyers, advocates, and legal consultants handle sensitive cases and provide advice that can significantly affect their clients’ lives or finances. If a client claims that they received incorrect advice, missed deadlines, or professional negligence, PI insurance provides financial protection against legal defence costs and damages.

Finance and Accounting Professionals

Tax consultants, auditors, chartered accountants, financial advisors, etc., are responsible for financial matters and statutory filings. If their advice results in a loss to the client, or if there is an error in their calculator that causes a loss to the client. Then PI insurance helps safeguard against claims arising from such mistakes.

Engineering & Construction Professionals

Engineers, architects, contractors, and project consultants are involved in the design, planning, and execution of construction projects. Design flaws, structural issues, or project delays can lead to costly disputes. PI insurance provides coverage for claims arising from professional errors or omissions.

Information Technology Professionals

IT consultants, software developers, system integrators, and cybersecurity professionals provide the technical solutions businesses rely on. Project failures, data breaches, or system errors can trigger client claims. Professional indemnity insurance helps manage legal expenses and compensation linked to service-related issues.

With so many best professional indemnity insurance plans available, choosing the plan that fits your requirements can be tough. To help you out, we have broken down the step-by-step procedure for buying professional indemnity cover.

Step 1: Assess your Business Needs

Determine your profession and business needs based on the industry risks. For example, if you are a doctor, assess for malpractice, wrong treatment, etc. This will help you choose a plan that goes well with your profession.

Step 2: Research Insurance Providers

After understanding the business requirements, research insurance providers. Research and compare them based on the coverage, reputation, claim settlement and more. Choose the one with positive feedback and a wide coverage scope.

Step 3: Complete Application

Once you have decided on an insurance provider, you need to complete the PI insurance application form. Ensure all the details entered in the form are correct. Incorrect details can delay the buying process.

Step 4: Submit Documentation and Pay Premium

You also need to submit the documents when you buy the plan. Once documents are submitted, review the plan carefully and pay the premium. Once payment is made, the policy documents will be sent to the email address instantly.

Having professional indemnity insurance is important for businesses and individuals who want to protect themselves from financial and legal risks arising from their work. In India, this cover is mandatory for certain high-risk professions such as doctors and accountants.

That said, professionals in other fields can also benefit from having a PI policy, as even a small mistake or client dispute can lead to costly claims. TATA AIG offers customised PI insurance plans for professionals across various fields. For instance, our PI plan to doctors, architects, accountants, etc are designed after understanding business risks.

Not just this, we have a team of claim experts on board with us to assist you with PI insurance claims. With an easy buying and issuing process, you can get the PI insurance plan in your inbox within a couple of minutes. So what are you waiting for? Buy our affordable PI insurance plan now!