The Purpose Of Professional Indemnity Insurance
What exactly is Professional Indemnity Insurance
? And who needs to consider taking it out? What is it actually for? And is it really worth taking out this type of policy? Well, this is one of the more complicated kinds of insurance and a lot of people will have little or no knowledge of it at all. However, once you have an idea of exactly what cover it provides, when it is required and how it is actually used, it is not so hard to understand.
This type of cover is basically designed for people who are working in a specific area where they are required to give important advice to other people. If you are seen as an expert in your field, and others rely on your guidance and judgment, then this type of insurance is very relevant indeed. However, it will only come into play if you have given someone poor advice and they are threatening to sue you as a result.
If someone has come to you in good faith because they rely on your extensive knowledge, then you are under a lot of pressure to give them accurate and realistic advice. For example, a stock broker would be well advised to have this type of policy just in case things take a turn for the worse. Making the wrong recommendations to someone about where they should or should not invest could end up costing them a great deal of money; and if this were to happen, then it would effectively be your fault.
When this sort of situation arises,
professional indemnity insurance is there to pay for the legal costs and fees. However, before taking out a policy, it is crucial that you check just how much protection you will have. Some insurers will cover you only for a small percentage of legal fees and costs, whilst others can offer you a far greater degree of protection. Like everything else in life; there is the good and the not so good. Reading the small print really is incredibly important!
This type of insurance policy can often be a lot more involved, but it is good to have an understanding of its basics. Anyone who is responsible for offering professional advice to others should always have professional indemnity insurance policy in place. Hopefully you will never need to fall back on it, but if you do then it can save you a great deal of money. It will often be quite a costly type of insurance to have and many companies are hesitant to even consider it.
Another reason why many companies are reluctant to take out this type of cover is that it takes quite a long time to set up. Many insurers will estimate a period of around twelve weeks before your cover becomes effective. This may seem like a painfully long time to wait, but it is definitely worth it in the long run. Some people will just take the chance that no legal problems will ever arise However, in business, it is always best to be prepared for every eventuality.
by: Jack Authors
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