Professional Indemnity Insurance

Professional Indemnity Insurance (PII) protects businesses and professionals from claims of negligence, errors, or omissions in their services. It covers legal costs and compensation in case a client suffers financial loss due to advice or services provided. In Singapore, PII is essential for professionals such as lawyers, consultants, architects, and accountants, as it ensures their financial security and helps maintain their reputation. Professional indemnity insurance and professional liability insurance are often used interchangeably and serve similar purposes in offering protection against claims related to professional conduct and advice.

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Types
Does my business need Professional Indemnity Insurance?
Cost
What does it cover?
Types
How much does it cost?

Common risks covered by PII include:

Malpractice:

Malpractice:

Coverage for errors or negligence that result in harm or financial loss to clients due to mistakes made during the provision of professional services.

Negligence:

Negligence:

Protection against claims arising from failures to exercise proper care, skill, or judgment in providing services or advice.

Contract Breaches:

Contract Breaches:

If a professional fails to fulfil a contractual obligation or violates terms agreed upon with a client, PII can help cover associated legal fees and any resulting compensation claims.

Does my business need Professional Indemnity Insurance?

Professional Indemnity is not a legal requirement. But before you think about whether you need Professional Indemnity Insurance, you first have to ask yourself if your business offers any advice, provides professional skills or services, or handles any information. It doesn't matter if you are self-employed, or a company, if the service you provide falls into the above category, you would need professional indemnity to cover your risk.

Professions that require Professional Indemnity Insurance (commonly for renewal of their professional license, which is regulated by local authorities) are:

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Doctors

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Architects

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Lawyers

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Accountants

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Engineers

Many other professionals such as financial advisors, insurance brokers, management consultants and marketing agencies, also purchase Professional Indemnity Insurance due to the nature of their advisory work.

How Professional Indemnity Insurance Helps Your Business

Here's how PII can benefit your business:

Financial protection

Financial protection

Covers the costs of lawsuits and compensation claims arising from errors, negligence, or omissions in your professional services.

Reputation management

Reputation management

Helps protect your business’s reputation by handling claims professionally and preventing long-term damage caused by allegations of malpractice or negligence.

Contractual requirement

Contractual requirement

Many clients, particularly in sectors like law, consulting, and architecture, require service providers to have professional liability insurance before entering into contracts, ensuring both parties are protected.

Steps and Documentation Needed in the Event of a Claim under Professional Liability Insurance

If a client files a claim against you for professional misconduct or errors in your services, having the right documentation and following the correct steps is crucial. Here’s a guide to help you navigate the process and ensure that your professional liability insurance provides the protection you need:

The first step is to promptly notify your insurance company of the claim. Most professional liability insurance policies require you to inform them as soon as you become aware of any potential claims or lawsuits. Delays in reporting may impact the coverage.
Gather all relevant documents related to the claim, such as emails, contracts, correspondence with the client, and any reports or evidence that demonstrate the service provided. Clear documentation will help build your case and support your claim under professional liability insurance.
Familiarise yourself with the terms and conditions of your professional liability insurance policy. Understanding the specific coverage limits, exclusions, and the claims process will allow you to manage expectations and follow the proper procedures.
Your insurer will likely conduct an investigation to determine the validity of the claim. Cooperate fully by providing any requested information or clarification. This will help ensure a smooth claims process.
Maintain detailed records of all communication with both the client and your insurance provider throughout the claims process. This documentation is vital for resolving disputes and ensuring the claim is handled efficiently.

By following these steps and maintaining accurate documentation, you can ensure that your professional liability insurance coverage offers the necessary protection against claims related to your professional services.

What does Professional Indemnity Insurance cover?

Professional Indemnity Insurance covers financial losses or reputational damage caused to your customers under the umbrella of:

Professional negligence

This may be through a mistake on your part, or incorrect information or advice provided to a customer that loses them money. It may also include your client overrunning on their budget and making a compensation claim against you.

Acts of defamation

Such as libellous or slanderous statements made about a customer/client.

Legal costs

Includes compensation payments awarded to the defendant. Your defence costs are also paid, including legal fees.

Loss of documents

Provides cover for damages due to destruction or damage to, or loss, distortion, erasure or mislay of a Third Party’s Documents for which the Insured is legally responsible, provided that the destruction or damage to, or loss, distortion, erasure or mislay of such Third Party’s Documents.

How much does Professional Indemnity Insurance cost?

The costs associated with Professional Liability Insurance vary in accordance with the specific policy chosen. Each policy is created based on the professional advice, products, or services your company provides.

  • Type of industry and services offered

  • Limit of liability or deductible

  • Business practices / exposures

  • Portfolio size

  • Claims history

Frequently Asked Questions

About Professional Indemnity Insurance In Singapore

  • PI insurance in Singapore may not cover fines, penalties, employee injury, or any claims made for incidents before the policy period.
  • PI insurance is expensive because of its broad coverage. You can face legal liability arising from professional negligence, depending on the nature of your profession, the size of the business, coverage level, and other factors that may contribute to risk exposure.
  • Public Liability (PL) insurance covers claims made by the public against damages, injury, illness, or loss. Meanwhile, PI insurance covers policy claims made by customers or clients involving professional negligence or mistakes.
  • PI insurance allows you or your business to recover financially from any incident resulting in money loss or civil damages. It can also cover your legal defence fees, compensation claims, or settlements as long as your policy covers them.
  • PI policy periods can last anywhere between 6 and 10 years, depending on the nature of your business activities.
  • No, E&O insurance is not designed to cover claims arising from intentional wrongdoing or fraud. Such claims may be excluded from the policy's coverage.
  • The claims process for E&O insurance in Singapore can vary depending on the insurance provider and the policy's terms and conditions. Typically, the insured professional needs to report the claim to the insurance provider as soon as possible and provide details such as the date and time of the incident, the parties involved, and any supporting documents. The insurance provider will then assess the claim and provide compensation if the claim is approved.

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