Insuring your business is essential in today’s business environment. You never know if one mistake or wrong decision can ruin your reputation and business. Imagine you are an investment advisor, and one piece of advice goes wrong that causes significant loss to your client’s wealth, and the person sues you. It will put a big question mark on your capability, and you have to pay a massive price for that. You may be able to recover your reputation over a period, but what about the financial loss?
How will you arrange the money if you have to compensate? Such incidents are quite common to those providing medical consultation or similar services. Professional indemnity insurance protects individuals and businesses from financial loss due to indemnity claimed by their clients for your failure of providing the desired service. It significantly reduces the risk of paying hefty compensation. This article enumerates why you need professional indemnity insurance in India, but before that, let’s understand what indemnity insurance is.
What is professional indemnity insurance?
It is a type of insurance that protects your business in case a client sues you for alleged negligence or failure of providing the service they paid for. If you provide consultation services like treating patients, giving legal advice, or some other, and the client suffers a loss due to some errors on your part, or something beyond your control, they can seek financial compensation. When you have professional indemnity insurance, you don’t have to pay the money from your pocket; rather your insurance provider will pay the whole or a part of the money. This type of insurance is indispensable for doctors, chartered accountants, layers, investment service providers, and people involved in similar businesses.
4 reasons why you need indemnity insurance in India
- Financial protection from indemnity claim
Financial losses significantly affect your business, and it’s a major cause of concern to doctors and other professionals who provide consultation services. As a businessman, you must take protection against untoward incidents. If you have professional indemnity insurance, the insurer bears the financial losses due to claims made by your client in case of an error at your end. The coverage includes defense costs, lawyer fees, court fees, claim amount, cost of filing legal papers, and others. It provides complete financial protection to meet the consequences of alleged service failure and indemnity claims.
- Build credibility
Credibility is essential for every businessman, and it applies to anyone involved in consultation services including doctors. Competition is very high in every business these days, and if you don’t have credibility, you won’t be able to establish yourself in the business. Professional indemnity insurance not only provides you financial protection but also enhances your credibility and brand image. It assures your clients and investors that in case of any error, they can claim compensation which builds trust among your existing and potential clients, and they don’t hesitate to take your service.
- Helps you to run your business more efficiently
Indemnity claims may come unexpectedly, and you won’t have time to arrange money to pay the compensation. It causes an unexpected financial burden on your business and interrupts the business operation. However, if you have professional indemnity insurance, you don’t have to worry about it since you get complete compensation for the losses due to the claims. without indemnity insurance, you will have to waste time dealing with the matter and settling it. Moreover, you have to arrange a large sum of money in a short time which affects your business operations.
- Keeps your assets safe and helps you focus on the business
You can’t run a consulting business if you don’t have the required assets. For example, you need a place, furniture, and testing equipment for medical or dental clinic setup. You put your money, and efforts into setting up the clinic. Many physicians take doctor loans to build their clinics. Protecting your assets is essential to run the business smoothly. However, a single indemnity claim can force you to sell your valuable assets and ruin your business. Professional indemnity insurance is the best way to protect your business assets and ensure you can run the business smoothly. It gives you peace of mind and helps you focus on the business.
Who needs professional indemnity insurance?
In today’s world, a wide range of professionals provide consultation services and need professional indemnity insurance. It’s because their advice or recommendations can directly or indirectly affect a client’s wealth, and they may claim compensation if your advice leads to a financial loss to your clients.
A professional indemnity coverage protects you financially if a customer files a claim against you for omissions in delivering professional services such as medical liability insurance.
Professionals like doctors, engineers, IT consultants, insurance agents, real estate brokers, stock brokers, financial advisors, architects, legal experts, mental health counselors, and many others.