Professional Indemnity Insurance can save your business

Even if you are not ultimately responsible for having caused the loss, the cost of defending yourself could be significant. "If you are liable it could cripple your business and threaten its survival,” says van Sweeden. "Typically, this kind of insurance protects you in the event of a claim made by one of your clients for an alleged error or omission that caused them financial loss.”

Van Sweeden says that Errors & Omissions Insurance indemnifies the insured for financial loss caused to a client from rendering or failing to render a service or give proper advice – this means it differs from Public Liability Insurance, which generally speaking covers risks such as bodily injury and damage to property suffered by a third party.

van Sweeden says the need for E&O cover has increased because of changes in the legislative landscape. With the advent of the Consumer Protection Act, far more emphasis is placed on consumer rights and, as a result, companies and individuals who provide services to clients must be mindful that it is easier than ever before for consumers to enforce their rights.

 

"The probability of having to defend against allegations of negligence has changed the question of ‘if’ to ‘when’,” says van Sweeden.

With a plethora of products in the market, van Sweeden says what makes A&G’s product unique is that its wording and purchasing process is extremely uncomplicated. He says E&O Insurance will cover customers for awards, settlements and defence costs incurred by the insured. In addition, the policy includes cover for the following:

• Misrepresentation: Negligent misstatement or misrepresentation;

• Intellectual Property: Unintentional infringement of intellectual property rights including copyright, patents and trademarks;

• Breach of Trust: Breach of confidence or misuse of any information which is either confidential or subject to restricted use;

• Defamation: The unintentional use of inappropriate statements or words;

• Dishonesty and Fraud: Dishonesty or fraudulent acts of your employees;

• Loss of Documents: Replacement and reconstitution costs of important documents that have been unintentionally destroyed, damaged or lost;

• Loss Mitigation: Reimbursement of the costs while mitigating financial loss from a claim or potential claim covered by the policy;

• Fee Recovery: Costs and expenses incurred when recovering fees due from your client;

• Sub-Contracted Duties: Activities and duties sub-contracted by you to carry out your business;

• Joint Venture Agreements: We will pay you for liability arising out of joint venture agreements, provided no cover has been arranged for the joint venture;

• Claims Preparation Costs: Costs incurred by you in preparation of the details of a claim, up to the insured limit; and

• Automatic Extended Reporting Period: Following the non-renewal of the policy, you have an automatic extension of 60 days in which to report a claim, as described in the policy.

There are certain risks we do not cover under our policy because they are more specifically covered under other insurance policies, such as Directors and Officers Duties, Bodily Injury, Property Damage and so on, says vanSweeden. He points out, though, that the exclusions found in our policy are not any more onerous than the exclusions found elsewhere in the market. Naturally, our premiums vary from one business type to the next, mainly because some business types are inherently more risky than others.