Professional Indemnity - Errors & Omissions Insurance

What is Professional Indemnity/ Errors & Omissions Insurance?

Professional Indemnity Insurance (PI insurance), also known as Errors and Omissions insurance (E&O) protects professionals against claims made by clients for damages caused due to professional negligence or errors in their work.  

Professional indemnity is essential for anyone who offers advice or provides a service. Professional Indemnity Insurance UAE and other countries can provide coverage for the legal costs of defending a claim and any awarded damages. The errors and omissions arise from professional negligence and can be protected through Professional Indemnity Insurance in Dubai, UAE or other countries.

It is essential to buy Professional Indemnity Insurance to protect your business from financial losses due to errors and omissions. While the cost of Professional Indemnity Insurance in Dubai and other parts of the UAE depends on the level of coverage and the risk associated with the industry, you can generally get high coverage with such plans when compared to the costs. Professional Indemnity cover can give you peace of mind that you would be protected from financial losses that may disrupt your business.

Who Needs Professional Indemnity Insurance?

Professional Indemnity Insurance is a basic form of insurance and is a must-have for those providing advice, consultancy, design services or any other service. The following professionals should consider getting Professional Indemnity Insurance - 

• Advertising and marketing professionals
• Business consultants
• Providers of 
  • Infrastructure-as-a-service (IaaS) 
  • Platform-as-a-service (PaaS)
  • Software-as-a-service (SaaS)
• Website and app developers
• Financial advisors
• Insurance brokers
• Recruitment consultants
• Property agents
• Estate agents
• Freelance workers
• Professionals such as accountants, engineers, lawyers, architects and IT consultants provide their clients with advice, designs, or services.

Why Get Professional Indemnity Insurance?

Professional Indemnity Insurance is a must-have for any professional or business providing services to clients or customers. As per the UAE law, companies offering professional services in some free zones must necessarily have an E&O policy.

Generally, any complaint about your product or service may result in a lawsuit in most cases. Irrespective of whether the concerned professional is at fault, they will still need to defend their company in a court. This makes Professional Indemnity Insurance crucial for any professional or business providing services to clients, as the plan would assist you in protecting yourself from probable errors for which clients may sue you.

Given below are some more reasons to get Professional Indemnity Insurance - 

• It offers financial protection from monetary losses borne by clients due to negligence, mistakes, errors, or omissions on behalf of the professional or business. 

• E&O Insurance pays for your legal expenses, which includes your attorney's fees as well as any settlements you may be obliged to pay. A noteworthy aspect of this policy is that it offers protection despite who is eventually held accountable for the errors. 

• Professional Indemnity Insurance can also provide financial assistance in case of claims for breach of professional duty and malicious prosecution brought by clients. 

• Having an E&O policy can be helpful in getting more business, as an active E&O policy becomes a prerequisite for the enforcement of large contracts in multiple jurisdictions around the world.

• The coverage of these plans can be extended on a worldwide basis in some cases, meaning that the policy may pay even if a claim is filed by a client in, say, the USA against a company in Dubai.

Common Risk Scenarios in Professional Indemnity Insurance

Here are the common risk scenarios with respect to Professional Indemnity Insurance:

• Technical glitch in a software (breach of contract) designed by an IT firm resulting in missed deadlines of the end client can lead to a lawsuit
• An architectural firm submits erroneous drawings  (breach of contract) resulting in financial loss to the client (cost of rework/rectification)
• Improper business advice given by a business consultant regarding market penetration strategies
• Loss of data at the insured's end due to negligence - the client may seek monetary compensation for data restoration expenses
• Inferior-quality designing of a website by a website developer resulting in loss of sales and reputation
• Insurance brokers can be accused of issuing a policy with inadequate coverages resulting in a denial of claim/financial loss
• Recommendation of a loan scheme with a high interest rate to a client by a financial advisor which comes to light after 10 years and results in financial loss to the client.

Major Inclusions of Professional Indemnity Policy

Professional Indemnity Insurance policies usually include liabilities, copyright infringement, errors and omissions, and more. Here are the major inclusions of the professional indemnity policy:

• Liability for Negligence: Coverage for any claims for damages or losses due to professional negligence in the provided services. 
• Libel and Slander: Coverage for claims arising from false statements against the insured. 
• Breach of Contract: Coverage for claims arising from a breach of contract between the insured and their clients. 
• Copyright Infringement: Coverage for claims arising from using copyrighted material without permission. 
• Multimedia Liability: Coverage for claims arising from utilising multimedia materials without permission. 
• Errors and Omissions: Coverage for claims arising from errors or omissions in the services provided. 
• Intellectual Property Rights: Coverage for claims arising from the insured's infringement of intellectual property rights.

Major Exclusions of Professional Indemnity Policy

Professional Indemnity Insurance policies may also contain exclusion clauses that refer to specific situations and activities such as

• Knowledge of potential issues before the period of insurance
• Criminal offences and fraud
• Contractual liabilities
• Professional advice is given without charge
• Bodily injury or property damage
• Liabilities assumed under contract
• Liabilities arise from operations outside the scope of the policy. 

Factors Determining Pricing of a Professional Indemnity Insurance

Professional Indemnity Insurance Dubai cost varies from one insurer to another and depends on several other factors. Here are the key factors regarding the same - 

• Type of Industry or Profession: Different types of industries require different levels of risk management and have different indemnity requirements. This also takes the nature of clients and the industry they belong to into consideration.
• Business Size: Businesses with more significant turnovers generally attract higher premiums as they represent a higher level of risk to insurers. 
• Cover Limits Chosen: Professional Indemnity Insurance covers can vary based on the limits chosen. Generally, the higher your limits, the more the premium costs. 
• The Geographic Location: PI insurance premiums can vary depending on where your business is based, with certain areas being considered riskier than others. 
• The Claims History: A good claim history may result in lower premiums, while any previous claims may lead to higher premiums. 
• Geographical Revenue Split: The breakdown of the revenue (as per the different regions of the world) can also impact the prices. Note that this is applicable only for MNCs.

At Policybazaar UAE, we take pride in our world-class risk assessment capabilities and plans which enable us to craft cost-effective risk management strategies through insurance that cater to your specific requirements. We are here to provide you with the peace of mind which is crucial to safeguard your business and achieve your future objectives.

FAQs

Q1: What does one mean by a Professional Indemnity Insurance policy?

Ans: Professional Indemnity Insurance financially protects organisations against third-party financial claims arising out of professional negligence, errors and omissions, poor advice, unintentional breach of responsibility, and loss of documents by the organisation. 

Q2: Is Professional Indemnity Insurance the same as Public Liability Insurance?

Ans: No, Professional Indemnity Insurance is different from Public Liability Insurance. The latter is a type of insurance designed to shield businesses from the risks of bodily injury or property damage caused due to their products or service. In contrast, Professional Indemnity covers injuries and losses of the clients due to professional errors or negligence in terms of actions or advice.

Q3: Is the Professional Indemnity Cover expensive?

Ans: The costs of Professional Indemnity Insurance vary as per the organisation, required coverage, and more. However, considering that the expenses related to even minor cases can be quite high, the value for money is considerably high with these plans considering the coverage they provide. 

Q4: Which additional covers can I expect in Professional Indemnity Insurance?

Ans: Some additional covers and upgrades that you can expect in Errors and Omissions coverage-

• Unintended use of another person's intellectual property;
• Bodily harm (resulting from the breach of professional responsibility);
• Coverage for responsibility brought on by the wrongdoing of consultants, agents, or subcontractors

Q5: Who is eligible to buy Professional Indemnity Insurance?

Ans: Professional Indemnity Insurance financially protects businesses that render services or advice to clients. Such individuals or businesses usually comprise medical professionals, architects, insurance brokers, lawyers, accountants, real estate consultants, financial institutions, IT experts, marketing and media agencies, and so forth.

Q6 What is generally covered in Professional Indemnity Insurance?

Ans: Professional Indemnity Insurance covers the costs related to regulatory court hearings along with defence costs. These plans also cover damages and settlements arising from any liability cases.