Understanding Negligence In Relation To Professional Indemnity Insurance

Most professional indemnity insurance policies are designed to protect businesses from the crippling costs of legal disputes and compensation claims. Generally included in these policies is cover for negligence, but what exactly does this mean and how far does it extend?

In the context of professional indemnity, negligence constitutes actions made by a party delivering a service (you, as a business) that don’t meet the standards or expectations a client has paid for. Put simply it means poor service, where the client feels let down or suffers a financial loss because of your company’s actions.

It is this financial loss that leads to so many negligence lawsuits being filed, where the dissatisfied client is claiming for compensation. You have a duty of care towards your clients, but if something goes wrong – for whatever reason – they may sue you for breach of this duty. In order to either settle these claims or hire a legal team to fight your corner, you need to have professional indemnity insurance in place to cover the costs.

Examples of negligent behaviour – which can affect all sorts of professions, from accountants and estate agents to recruitment consultants and architects – include:

• Loss of documents
• Errors or omissions
• Dishonest behaviour

To obtain a quote for professional indemnity insurance, or if you have any questions in regards to our insurance policies, please feel free to give a member of the team a call.

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