What is Professional Indemnity Insurance?
For any businesses or individuals who charge fees for professional services , making a mistake can mean significant cost to your customers. You could face civil liability for any breach of professional duty and your customers can claim such costs from you. A Professional Indemnity Insurance will cover both the legal fees and compensation for arising from the wrongful acts made against you.
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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:
Doctors
Architects
Lawyers
Accountants
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.
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.
Contact us for policy quotation,
comparison and unbiased advice now!