No one provides service to a client with the intention to indulge in malpractice, because it doesn’t serve the purpose of either the client or the service provider.  However, not all future events are within your control and things can go wrong anytime during your contract period with the client.  Professional indemnity insurance covers this unforeseen aspect of your business where you may have to face a legal action due to an incident arising from the services provided by you.


The insurance cover allows you to carry out your business without worrying about a potential lawsuit.  You save a lot of time and money that you would have otherwise spent on defending a legal battle.  The legal issues don’t become a hindrance to your business, which in turn prevent the loss of income that could have happened during the period of defending the allegations without the cover.


The insurance covers many risks, such as:


Breach of confidentiality:  As a service provider, you are required to maintain the confidentiality of the business.  However, you may unintentionally disclose some information provided to you by the client to a third party.  Professional indemnity insurance provides you the cover to handle the situation without impacting you financially.


Breach of contractual agreement:  If you fail to adhere to the guidelines specified by the client or if you are unable to finish a project within the stipulated time, the client is entitled to file a lawsuit against you for the loss of business.


Theft or fraud:  In the event of a fraudulent activity by a staff member of the service provider, the client may initiate legal action against the service provider. However, indemnity insurance covers the claim by the client for the alleged loss.


Loss of important documents:  Professional indemnity insurance covers any loss of data that was in the custody of the insured.  If you lose or misplace a document and you are unable to retrieve it, it can result in business loss for the client depending on the significance of the document.


Defamation:  Any verbal or written communication that is deemed defamatory by the client can lead to legal action.  However, if the defamation was unintentional, the cover is provided to the insured.


Intellectual property breach (unintentional):  The insurance covers any accidental infringement of intellectual property under the copyright act.  For example, a consultant may be working with two clients and inadvertently uses a design or information of one client in a project with another client.

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