While the Professional Indemnity policy is a legal mandate for some types of businesses in India (like an insurance broker/stock broker); for other professions it is always a sensible recommendation. Essentially the underlying thought behind professional indemnity insurance is to protect the professional from claims caused by the negligent performance of professional services (or breach of duty of care). It covers professionals for claims made against them for financial losses flowing from the advices and services that they provide to their clients. It also provides financial protection to meet the costs of defending legal actions and any damages that may become payable.
What is covered?
- Compensatory damages awarded against the professionals
- Settlements and
- Legal costs and expenses associated with defending legal actions
Who is covered?
- a legal entity and its subsidiaries
- principal/partner/director (past/present)
- employees (past/present)
- Contractors Claim Scenarios
- Few organizations are immune to legal action from a customer who’s dissatisfied with the performance of promised services. The following scenarios illustrate common professional liability risks.