Professional Indemnity Insurance

Professional Indemnity Insurance is used by professionals such as doctors, lawyers, architects and accountants to protect against potential negligence claims. In many cases, professional indemnity insurance, such as medical malpractice insurance, is mandatory.

While this form of insurance for doctors is commonly called "malpractice" insurance, the phrase used for professional indemnity insurance for other professions such as accountants, architects, insurance agents and lawyers is "errors and ommissions" coverage. The phrase refers to insuring the professional in case he or she makes an error or omits something in the handling of your situation, resulting in a loss to you.

The easiest way to understand this type of insurance is to consider it "mistake" insurance -- it insures against the professional making a mistake when providing services to you, again, resulting in damage to you. Now, it's not quite as simple as this because we all know everyone makes mistakes. The key factor is whether or not the professional should have known better based on his or her education and professional credentials.

In a case of medical malpractice, if a doctor makes a verifiable mistake in treating a patient that results in damage to the patient, and the patient can prove that the doctor should have known better, the doctor's professional indemnity insurance carrier would step in and defend the doctor and/or settle the case with a financial payment to the injured party.

It should be noted that one of the reasons cited for spiraling medical costs in the U.S. has been the increasing cost of medical malpractice insurance that doctors are required to maintain.

If your attorney is handling a case for you, and he fails to file a paper with the court by a deadline, resulting in the decreased value or complete loss of your case, the attorney would be liable for an errors and omissions claim.

Along the same lines, if your accountant makes a mistake in preparing your taxes resulting in damages to you such as fines and penalties, the accountant might also be liable for an errors and omissions claim.

Professional Indemnity Insurance claims are very complicated because it can be extremely difficult to prove that a mistake was unreasonable and that damages were a direct result of that mistake.

In any case, professional indemnity insurance coverage is a necessary part of doing business for any professional.

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