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In the professional services sector, one can be held responsible for any loss a client experienced. Professional indemnity lawsuits can be very problematic as they can result in million-dollar payments. That’s where professional indemnity insurance comes in.
This guide will answer what PII insurance policy is, how much it costs, and the best companies.
Understanding Professional Indemnity Insurance
It is an insurance policy that provides protection if there are lapses in the services you provided which caused the client to file a claim. It is also called errors and omissions insurance or professional liability insurance.
What is Indemnity In Insurance?
An indemnity in insurance is the responsibility of one party to reimburse the loss of another party. In businesses, indemnity is often established through contracts.
What Is PI Insurance?
PI insurance is a short-term for professional indemnity insurance, also referred to as prof indemnity by some. Others also like to call this PII insurance.
Common Terms Used In Professional Indemnity Insurance
Now that you know what indemnity insurance is. Let’s take a look at the common terms used in the language of the policy.
Insureds
Insureds pertain to the persons or entities who can use professional indemnity insurance in case a covered claim is filed.
Policy Duration
It means the length of time until professional liability insurance ceases to provide coverage. Professional indemnity cover usually provides coverage for 6 months or 1 year.
Claim
Claim is an act brought forth against the policyholder or additional insureds due to commission of a peril covered by indemnity insurance.
Additional Insureds
Additional insureds are persons who the policyholder allows to be protected by professional insurance indemnity. even though they’re not the one paying for the policy’s premiums.
Defense Costs
Defense costs pertain to expenses professional indemnity insurance covers on your behalf in case you need to wrap a claim up in a court of law.
Endorsement
indemnity insurance can be introduced with an endorsement. An endorsement changes the policy limits or policy duration.
Policy Limit
Policy limit is the amount of coverage you can get from indemnity insurance.
How Does Indemnity Insurance Work In Practice?
Particularly, insurance for professional indemnity,kicks when you’re liable for committing:
Negligence
You failed to employ appropriate measures to ensure that you completed a service without any errors.
Misrepresentation
You failed to disclose the important points which the client must know before agreeing to employ your services.
Breach Of Contract
The client filed a claim because you omitted or failed to follow the conditions you agreed upon when signing the work contract.
Missed Deadlines
This pertains to the failure of completing a service on the date agreed by you and the client as stated on the work contract.
Inaccurate Advice
A client asked for your comments about his or her project. However, it turned out that the methods or processes you told the client to follow resulted in costly issues.
Who Needs Professional Indemnity Insurance?
Those who provide professional services should not think twice about looking for a cheap PI insurance quote and getting insured. The table below shows who should get an indemnity insurance policy and why.
| What Does Indemnity Insurance Cover? | |
| Lawyers | legal malpractices such as:
-Failure to obtain client consent-Failure to file important documents -Failure to apply or comprehend the law |
| Doctors | medical malpractices such as:
-Misdiagnosis -Wrongful prescription of medicine -Surgical errors (e.g closing a patient with scissors or cotton buds still inside the body) -Birth injuries |
| Accountants /Bookkeepers | accounting/bookkeeping malpractices such as:
-Providing false or erroneous tax advice -Failure to spot errors on the balance sheet |
| Engineers /Architects | engineering/architectural malpractices such as:
-Assignment of unqualified personnel -Conflict of interest -Failure to satisfy the terms and conditions of the contract |
| Freight Forwarder/Broker | freight forwarder/broker malpractices such as:
-Failure to inspect/inquire about the motor carrier’s capacity to transport cargo before hiring -Failure to communicate with the clients |
| Pharmacists | pharmacy malpractices such as:
-Miscalculation of medicine dosage -Failing to identify drug interactions and contraindications |
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Professional Indemnity Insurance
It covers claims filed because there are issues with regard to how you performed a service, which inflicted economic or financial losses to a client.
The limits of professional indemnity depend on what kind of professional services a policyholder offers. But still, in practice, the policy limit starts at $1 million up to $2 million.
Professional Indemnity Insurance Cost
The cost varies from one policy holder to another. And so, there’s no fixed price. That’s why each source has its own take on the insurance cost.
based on recommended companies the cost range between $40 per month or $480 per year.
What Affects the Cost of Indemnity Insurance?
These are the following factors that affect the cost of indemnity insurance.
- Claims History
- Expertise
- Deductible
- Nature Of The Services You Offer
The Best Professional Indemnity Insurance
Next
It offers discounts if you decide to buy insurance policies in bundles. However, if you get professional indemnity insurance with general liability insurance, Next gives you lower premiums to save costs.
In addition, many say that Next’s certificate of insurance can be acquired within minutes.
Average cost: $25 per month
Our rating: 10/10
Pros
- Best overall
- Issues an online proof of insurance instantly
- Great customer service and reputation
- Excellent rates
- Outstanding value for money
Cons
- Couldn’t find any
Rank and Review Insurance Companies
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CoverWallet
CoverWallet offers the professional indemnity insurance of its partners such as Hiscox and Chubb. CoverWallet allows you to get and compare professional indemnity insurance quotes from different carriers.
It can be bundled with general liability or cyber liability insurance depending on your profession or business.
Average cost: $28 per month
Our rating: 10/10
Pros
- Has online agents ready to help and provide advice
- Stable rates
- Cancel your policy anytime
Cons
- Not an insurance company but a broker offering the policies of its partners to customers
Tivly®
Tivly® sells professional indemnity insurance to a wide variety of businesses. However, it doesn’t issue online quotes, and customers must speak with a representative to get covered.
Average cost: $30 per month
Our rating: 10/10
Pros
- Compare insurance quotes over the phone
- Responsive customer service
- Takes you to partners if it can’t provide coverage
Cons
- Doesn’t issue an online quote for the insurance
Thimble
Thimble’s professional indemnity insurance will take care of actual or alleged negligence, defense costs, and unwarranted claims of negligence or malpractice against you.
Average cost: $45 per month
Our rating: 10/10
Pros
- Best company for short-term indemnity insurance
- Thimble’s rates are cheaper than other companies
- Offers coverage for a variety of professional services
Cons
- Customer support can’t be contacted through phone calls or emails
Hiscox
Hiscox’s professional indemnity is very comprehensive. It offers various coverage for such as negligence, misrepresentation, defamation, and breach of confidence.
Average cost: $51 per month
Our rating: 10/10
Pros
- 14-day money back guarantee
- Worldwide coverage
- File and track a claim online
Cons
- Some report that Hiscox denied their claim even if was stated on paper that what happened can be covered
The Hartford
The Hartford offers Professional indemnity insurance with a proven expertise. The company is a master of the ins and outs of insurance services.
Average cost: $53 per month
Our rating: 8/10
Pros
- Has 200 years of experience underwriting the insurance policy and other business indemnity insurance policies
Cons
- Qualifying for The Hartford’s indemnity insurance requires a lot of documents
