Professional Indemnity Insurance in South Africa
Every South African business owner or professional service provider should consider getting business insurance for his company, whether it is big or small. The reason is the same as with any other insurance – simply because there are many risks involved, especially when running a business or delivering professional services. Other than liability insurance, one of the most common types of coverage you can get for your business is Professional Indemnity (PI) Insurance.
What is professional indemnity Insurance?Definition: PI insurance is there to cover you, should your client undergo any financial loss because of the service you provided them. In other words, should you be a professional that sell your services or advice to clients and it turns out that a mistake is made or negligent advice is provided to the customer, which then results in a lawsuit, then the legal costs or compensation for damages will be met with a PI policy.
Why do you need PI Insurance?First of all, no-one is perfect. Even if you are a professional there may be times where mistakes are made. Any kind of business, therefore, runs a risk of acting out a negligent act or omission which can cause loss, damage or injury to a third party. The big risk comes when these unexpected and unplanned legal fees and compensation for damages, loss or injury has to come out of the business budget. This may result in a big financial setback and, depending on the size of your business, sometimes even bankruptcy. For this reason, PI insurance is a very important part of any business and can help in the event where human errors are made.
What Are Covered?The following are usually covered by a PI policy:
- Protection against professional negligence
- Unanticipated events
- Lawsuits with cruel intent