What is Professional Indemnity (PI) insurance?
Professionals, such as doctors, lawyers, architects or consultants, use their professional expertise and skills to solve complex challenges every day. Professional Indemnity Insurance provides financial protection to such professionals if their clients files a legal complaint for an unintentional mistake or miscalculation. It covers legal defence costs, settlements or compensation, safeguarding their reputation and years of hard work.
TATA AIG Professional Indemnity Insurance provides broad coverage to handle such claims of errors or misjudgment, so that professionals can continue their work without any disruptions and financial strain.
Importance of Professional Indemnity insurance
Professional Liability Insurance
covers defence costs, settlements and cost and settlement arising from professional errors, reducing the financial burdens.
Designed for a wide range of professionals - doctors, lawyers and more.
Who can buy Professional Indemnity insurance?
Types of Professional Indemnity Insurance
Different professionals face different kinds of risks while offering their services. That’s why Professional Indemnity Insurance comes in various types, each tailored to specific professions.
Business Indemnity Insurance for Companies: Service-based businesses like IT firms, marketing agencies and consulting companies can be held liable if a client suffers loss due to their advice or deliverables. This cover protects the organisation as a whole.
Indemnity Insurance for Doctors: Medical professionals can face claims due to misdiagnosis, errors during treatment or patient dissatisfaction. This insurance helps cover legal and compensation costs.
Professional Indemnity Insurance for Chartered Accountants: CAs can face claims if their clients suffer financial loss due to their advice. This policy protects them from such claims.
PI Insurance For Lawyers: Legal practitioners may be sued for giving incorrect advice or missing deadlines. This policy protects against professional lapses.
PI Insurance For Architects: If a design flaw leads to a building issue, architects can face serious claims. This plan helps handle such liabilities.
PI Insurance For Consultants: Individuals working in HR, finance or business strategy consulting departments can face claims for negative business impact of their advice. This policy protects them against the resulting legal costs.
How Does Professional Indemnity Insurance Work?
Working of Professional Indemnity Insurance Policy
A professional indemnity insurance policy works differently from other insurance types, as it does not cover direct loss to the business, property or the insured themselves due to risks like theft, fire and burglary. This insurance covers claims that are reported during the policy period, protecting professionals if a client raises a complaint about errors or mistakes in the services provided. These claims work as a, i.e., the insurance policy can help only when there is a claim reported by a client.
The policy also covers retroactive claims, i.e., the claims that are made during the current policy period or for an error made a few years or months back, when a policy was first purchased (retroactive date).
Simply put, here’s how it works:
- A claim arises when a client alleges financial loss, damage or harm due to an error, omission or alleged negligent act in the professional's service.
- The insurer steps in to cover Professional liability and defence cost or damages if the claim is valid and falls within the scope of the policy.
- Coverage applies only if the claim is made and reported while the policy is active. This is why timely renewal is crucial.
The professional must promptly notify the insurer of any claim or even a potential situation that may lead to a claim without any delay in reporting.
What is Retroactive Date in Professional Indemnity Insurance?
One of the most important aspects of the PI policy is its retroactive date. The retroactive date is the earliest date from which your professional services are covered under a professional indemnity insurance policy (or a claims-made policy). It only applies to claims-made policies, where coverage is triggered when a claim is made and not when the incident occurred. Simply put, it determines the period from which the policy will cover past incidents or errors.
For example, suppose a financial consultant insured their business through professional indemnity insurance from a different insurer from April 1, 2018 (retroactive date), and maintained continuous coverage without any lapses.
Suppose one of their clients raises a claim in 2024 for an error made in May 2018. Since the reported claim is after the retroactive date, and they maintained continuous coverage, this claim will be covered even when they shift to a new insurer. However, if the mistake happened in March 2018, before they purchased this coverage for their business, it won’t be covered.
Transferring Retroactive Date from Old Insurer to New One
When switching insurers, professionals must ensure that the retroactive date in Professional Indemnity is carried forward to avoid coverage gaps. This date ensures claims for past services remain protected. If not transferred, any claim arising from prior work may be denied, even if it is valid. This may leave professionals financially exposed to errors made before the new policy started.
TATA AIG Professional Shield & Its Features: Your Ideal PI Insurance
Our professional indemnity policy covers the claims reported during the policy period due to unintentional errors reported on or after the retroactive date (i.e., the earliest date from which claims may be considered).
With us, professionals receive coverage for legal expenses.
Get uninterrupted coverage with a free 90-day window to report claims after the policy ends and is not renewed for reasons other than breach of policy terms.
The same policy framework can be adapted to different professions (doctors, lawyers,). Thus, our plan is suitable for firms with multiple professionals.
We offer policy purchase, claim tracking and renewals through our website, and improving convenience and reducing in-person meet-ups.
What is Covered under the TATA AIG Professional Shield Plan - Key Inclusions
Before buying a PI insurance policy, it is important to understand the risks it will cover. Here is the list of professional indemnity insurance coverage:
Claims from Professional Errors or Omissions: PI covers damages arising from actual or alleged negligence, errors or omissions while performing professional duties.
Legal Defence Costs: Professional indemnity cover pays for legal expenses to defend against covered claims, including court representation and investigation.
Court Attendance Benefit: ₹1,000 per day is provided if the insured is required to attend court as a witness in a covered claim.
Lost Document Cover: Covers expenses to restore or replace third-party documents lost or damaged while in the insured's custody during professional service.
Retroactive Coverage: Professional liability coverage includes claims for professional services provided on or after the retroactive date mentioned in the policy schedule.
What is Not Covered under TATA AIG Professional Shield Plan - Key Exclusions
Understanding what is not covered under a plan is crucial for making an informed decision and securing the right type of professional indemnity insurance coverage.
Bodily Injury & Property Damage: Physical injury or property damage claims are not covered.
Contractual Liabilities & Performance Guarantees: Claims arising from guarantees or contracts that exceed professional duty are excluded.
Defamation or Reputation-Related Claims: Excludes coverage for defamation, untrue statements or similar allegations.
Deliberate or Criminal Acts: No cover for fraud, intentional non-compliance or criminal activities admitted or proven in court.
Pollution or Environmental Damage: Claims involving pollutants or contamination are excluded.
Insolvency or Bankruptcy: No coverage for claims related to the bankruptcy or administration of the insured.
Prior Known Circumstances: Claims arising from incidents the insured was already aware of before the policy started are excluded.
Patent or Trade Secret Infringement: Excludes losses related to patent violations or misappropriation of trade secrets.
Antitrust/Unfair Competition: Any claims related to monopoly practices, trade restrictions or unfair competition are excluded.
Employment Practices/Discrimination: Any claims related to employment practices, harassment or discrimination (systemic or intentional).
Infrastructure Failures: Claims due to mechanical failure, electrical failure (including surges, blackouts) or telecom/satellite system failures.
Costs Assessment Failures: Claims due to failure to make an accurate pre-assessment of the cost of performing professional services.
Trade Debts: Losses related to trading debts incurred by the insured or guarantees given for debts.
Fines, Penalties & Punitive Damages: The policy does not pay for government fines, penalties, or extra punishment charges (like punitive or exemplary damages).
Claims by Related Entities: Claims made by your own group companies, parent company, or others insured under the same policy are not covered.
War/Terrorism: Any claims arising out of war, terrorism, sabotage, rebellion, or related political/military activity.
Factors to Consider When Purchasing Professional Indemnity Insurance
Before you buy professional indemnity insurance, these are key factors that must be considered to ensure you secure adequate protection, as not all professionals face the same level or nature of risk:
Choose the Right Sum Insured: Assess your current potential legal costs and liabilities based on your profession and client exposure. Choose a sum insured accordingly to ensure you are adequately covered.
Be Transparent with Information: Disclose past claims, complaints or incidents truthfully. Failure to do so can result in claim rejections and last-minute financial hassles.
Understand Policy Inclusions & Exclusions: Read the policy document carefully before buying professional indemnity insurance online to know exactly what is and isn't covered. This can help you prepare better and seek help for any disputes immediately.
Check the Retroactive Date: Ensure the policy covers professional activities from the date you started practising and not just from the policy start date. This will give you better coverage.
Review Claim Process & Support: A straightforward and supportive claims process makes a big difference during stressful legal disputes.
Compare Premiums & Coverage: Ensure that the chosen sum insured and plan details are cost-effective. This means evaluating the coverage depth and service quality before making a decision.
Step-by-Step Process to Buy Professional Indemnity Insurance from TATA AIG
Go to our official TATA AIG website and go to the PI insurance page
Enter your personal details, such as name, email address and contact details.
Enter your professional details, including your profession, start date, etc.
Select the sum insured, review details and complete the payment to get professional indemnity insurance in India.
Documents Required for Professional Indemnity Insurance
Proof of Identity, such as an Aadhaar card
Claim History (if any)
Certificates for Professional Qualification
Annual Income or revenue details
How to File a Professional Indemnity Insurance Claim?
As soon as a claim or potential claim arises, notify TATA AIG via 24/7 toll-free number or via email. This must be done as soon as practicable.
Provide clear information about the incident or complaint, dates, persons involved and other relevant details.
Avoid settling or accepting responsibility without written consent from the insurer. Unauthorised actions may affect claim admissibility.
Assist TATA AIG in the investigation by sharing all requested documents and facts. Take reasonable steps to minimise further loss.
TATA AIG will assess the claim, approve legal defence and as per policy terms.
Stay legally protected with tailored indemnity cover.
Professional Indemnity Insurance Policy - Limit of Indemnity
Limit of Indemnity or Limit of Liability is the maximum amount any insurer pays for the claims covered under a policy - which is also known as the policy’s sum insured. This means that this limit will state the maximum amount of coverage you can receive in a year or for a claim.
This limit can be applied in two distinct ways: the Any One Accident (AOA) Limit and the Any One Year (AOY) limit. These limits specify the total amount a professional will receive for one claim in the policy year, and the total amount covered for an entire year.
Any One Accident (AOA) Limit: This set limit is the amount the insurer pays for a single claim made during the policy year, even if it is the only claim. This can often be as much as the total coverage amount or less.
Any One Year (AOY) Limit: This defines the total amount a professional can receive from the insurer within a single year for all claims. Any type of coverage included in this policy does not exceed the AOY limit, including the court attendance benefit or any other extension cover.
The insurer allows you to select the ratio of these limits when buying the policy, such as 1:1, 1:2 or 1:4. According to these ratios, the insurer pays the claim amount.
For example, suppose a doctor opts for a 1:1 ratio and has the sum insured of ₹1 crore. Thus, the maximum limit for any one accident is the same as the total sum insured - that is, ₹1 crore. Whereas, if they select 1:4 as the ratio, the limit for one accident will be ₹25 lakhs.
Key Takeaways
The TATA AIG Professional Shield Insurance is a professional indemnity insurance policy. It is designed to protect professionals and ensure that they continue to operate uninterrupted. We offer robust protection against claims arising from alleged negligence, errors or omissions in your professional services.
With features like coverage for legal defence costs, lost documents, court attendance benefits and a 90-day extended reporting period, TATA AIG ensures you are protected at every step. make it ideal for doctors, lawyers, . With us, you can focus on the work while we manage the financial risks and reputation with the best professional indemnity insurance.
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Health Risk Assessment
