Professional Indemnity Insurance
Protect Your Business Against Costly Professional Errors
Whether you run a consultancy firm or any other professional service business, making mistakes is human, but the consequences can be significant.
Professional Liability Insurance provides the financial protection you need against claims arising from professional errors, negligence, or incorrect advice.
This allows you to conduct your business without worries.
What is Professional Indemnity Insurance?
Professional Indemnity Insurance, also known as a Professional Liability Insurance, protects you and your employees from the financial consequences of errors, negligence, or incorrect advice in your work.
Despite your best efforts, mistakes can happen, and a client may suffer damages as a result of your work or advice. With this insurance, you don’t have to worry about high costs if something goes wrong.
By covering legal expenses and damages, it allows you to focus on your work with confidence, knowing you are well protected from financial risks associated with your profession.
What Does Professional Liability Insurance Cover?
With Professional Liability Insurance, you can count on coverage for, among other:
- Financial damage resulting from professional errors.
- Legal costs in case of liability claims.
- Costs for restoring reputational damage after a claim.
- Loss or damage of important documents.
What Does Professional Indemnity Insurance Not Cover?
- Personal injury to individuals
- Damage caused to third-party property
- Damage caused intentionally
- Damage due to financial crimes such as theft, fraud, or forgery
- Damage to your own property or to employees
- Fines or penalties imposed by a court
- Damage from cyber incidents unless specifically insured
- Liability as a director, commissioner, or supervisor
- Damage caused by failure to achieve promised results
- Damage caused by exceeding cost estimates or timelines
Optional Coverages:
Run-off and Retroactive Coverage
You can choose to insure the retroactive risk (prior acts). This means you are also covered for damage caused before the policy start date. Typically, you can choose a retroactive period of 1, 2, or 3 years.
Additionally, it is possible to cover the run-off risk (tail coverage) at the end of the policy. This means that after the policy ends, you are still insured against claims related to the insured period.
Business Liability Insurance
You can also insure Business liability as part of your coverage. This means that you are covered for damage your company accidentally causes to others or their property, for example, if a visitor trips in your office.
By combining both insurances, you are better protected against both professional errors and general business risks.
Who needs Professional Indemnity Insurance?
Examples of Covered Damages
Development Phase
Incorrect Estimation of Solar Potential
When assessing a location, the solar potential is incorrectly estimated due to the use of incorrect data. As a result, the return on the solar park is lower than expected, leading to financial losses for investors.
Construction Phase
Use of Incorrect Materials
During construction, materials that are not suitable for the specific climate are used, such as cables that cannot withstand high temperatures, leading to malfunctions and higher maintenance costs.
Investment and Financing
Incorrect Financial Projection
When creating financial models, costs and revenues are incorrectly estimated, for example, due to incorrect assumptions about energy prices or subsidies, which can lead to insufficient returns for investors.
Operation and Maintenance
Faulty Performance Monitoring
A faulty monitoring system that fails to quickly detect performance deviations can result in problems not being identified and resolved in time, leading to lower energy production and revenue loss.
What Does Professional Liability Insurance Cost?
The premium depends on various factors, including:
- Your profession
- The business structure
- Your annual turnover
- The insured amount
- The deductible you choose
- Your business activities and the industry in which you operate
- The number of employees
- The additional coverages you choose
In general, the greater the risk, the higher the premium.
In addition to Professional Liability Insurance, entrepreneurs often take out:
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Frequently Asked Questions
There are five main points to consider when choosing a Professional Liability Insurance policy:
- Coverage: Make sure the insurance matches the specific risks associated with the profession. Each professional field has unique risks, and coverage can vary significantly between insurers.
- Insured Amount: Choose an insured amount that fits the risks and the requirements of clients. In some professions, a claim can amount to millions of euros.
- Retroactive Coverage: Check whether the insurance also covers past mistakes.
- Costs: Compare premiums and conditions to find the best value for money.
- Claims Handling: A swift and professional handling process is essential. Experienced claims handlers ensure that the relationship between you and your client remains as intact as possible.
Professional liability insurance covers the financial damage caused by a professional error. It doesn’t matter who makes the mistake: you, an employee, or someone else working under your responsibility. Temporary workers, interns, or volunteers, as well as directors, commissioners, supervisors, and partners, are also insured.
Professional liability insurance (PLI) is legally required for some professions. This applies, for example, to notaries, accountants, lawyers, and trustees.
For most professional groups, professional liability insurance is not mandatory. However, a client may require you to take out professional liability insurance. Trade organizations you are affiliated with may also require this. PLI is advisable anyway if you provide advice or services.
Yes, the insurance premium is tax-deductible. The premium is considered a cost. Therefore, you can deduct the premium from your profit when filing taxes.
Here are the differences:
Professional Liability
In certain professions, you can cause financial damage to a client, for example, due to a design error or incorrect financial advice. Professional liability insurance covers this form of damage.
Business Liability
When others suffer injury or material damage due to your products or activities, you are liable for it. The damage resulting from this is covered by business liability insurance.
Directors and Officers Liability
As a director, commissioner, or supervisor, you can be personally held liable for damage resulting from your decisions. You are required to compensate for this damage yourself. Directors and officers liability insurance covers this form of damage.
Contact us immediately. We will assist you with handling the claim and ensure proper support. To report a claim or for more information on the next steps, visit our informative claim reporting page. Learn more about reporting claims!
