Home » Who needs Professional Liability Insurance & Why?
Subscribe for News letter
 
 
Fetching Data...
Site Map Why Finalaya
Financial Blog

Who needs Professional Liability Insurance & Why?

06 Sep 2016 |By: Team Finalaya

Professional Liability Insurance

In the purview of IT services, India is the top outsourcing destination thanks to improved IT infrastructure over the years and the procurement of talented pool of resources at a competitive price point. Ever since the economic liberalization in the 1990’s, there has been a sharp growth in the Indian economy where there are more jobs in the market. People have since moved away from stands clerical jobs and are taking up more complex and dynamic assignments that require expertise and professional training. Jobs like software engineering, graphic designing, business consultation, digital marketing are some high paying careers people are opting today. Although, these jobs have changed the fabric of human resources and the job spectrum, it has also brought with it greater accountability and onus of responsibility.

For instance, most IT companies work for clients that have their businesses overseas or domestically. Either way, IT projects are highly complex in nature and require the expertise of ace programmers, designer, and testers whose job is to ensure that the product functions properly through various stages of development. Nonetheless, sometimes a glitch can happen, for instance overlooking a dangerous bug that has crashed the system or a delay in project delivery. Both scenarios can have immense loss to the client and there are instances where service agencies have been sued for lakhs of rupees. Representing oneself in such litigation as well as paying hefty amount as pay-out can cause immense loss to a firm. However, if a company has opted for professional liability insurance, the insurer provides cover against the liability, thus protecting the assets of an enterprise.

Although, professional liability insurance is a highly popular corporate insurance product in the West, in India, majorly big companies initiate taking such schemes. However, in reality, this insurance product is more viable for small and medium-sized enterprises (SMEs) or even independent consultants. While most big firms have their legal cell and team of advisors to handle professional liability litigation, SMEs do not enjoy that luxury, thus making them more vulnerable. Therefore, the purpose of this write-up is to not only emphasize the importance of professional liability insurance in today’s complex business eco-system but also clear the air about this insurance policy.

What does professional indemnity insurance policy covers?

Professional indemnity insurance provides comprehensive cover against a different kind of liability emerging due to error and omission leading to loss of important data and information, failure of deliver or any lacking while rendering a professional service.

What are the benefits the policy offer?

The policy offer’s exhaustive coverage against –

1. Risks entailed by different professional groups and services

2. Cost of legal cover and expenses

3. Instances of defamation and denouncements

4. Cases related to infringement of intellectual property rights

5. Cost of claim investigation

How real are these risks?

Professional liability risks are indeed real. For instance, you are the owner of an IT company that provides cloud computing service in the area of customer relationship management or CRM to various clients. Due to inadequate security measures or an overlooked bug, the data has been compromised by an external party and confidential customer information is released on a public domain. All this has affected the branding at the same time incurred a huge business loss to your client, and you are a service provider is slammed with a lawsuit.

What do you do in such a case? You are likely engaging a legal service for representation in the court of law and if the final verdict is against your company, you will also be liable to pay compensation out of your pocket. Conversely, if you have taken professional liability insurance, the insurer will bear all the cost, thus protecting the assets of your company.

Besides, unintended errors and omissions, there are incidents where the employee of the company is involved in fraudulence and data theft that results in falling of customer information in the hand of the competitor of your client. These risks by no means are exaggerated and pose a real threat to IT service providers.

Is there any exclusion under the policy?

While professional liability insurance cover provides comprehensive indemnity, there are some exclusions that one should not amiss. Some standard exclusions under the policy are stated as below –

1. Any criminal act of violation of law

2. Pure financial losses such as loss of goodwill or market share

3. Bodily injuries or damage of tangible property

4. War and nuclear perils

Is professional liability insurance only meant for the IT sector?

As the name signifies, professional liability insurance can be opted by professional from any field of expertise. The policy can be taken by IT firms, BOP sector, engineers, accountants, lawyers, doctors, independent consultants and even fitness trainers and yoga instructors.

Where can one buy professional liability insurance company from?

There are a number of insurance companies in India, such as ICICI Lombard, TATA AIG Insurance, New India Assurance, Bajaj Allianz General, HDFC Ergo, that offer professional indemnity insurance policy. You can procure this insurance policy online, however, its best to get in touch with insurance brokerage firm such as SecureNow, who have a team of underwriters that will conduct a risk assessment and help you get a policy tailor-made for your need.

Recent Blogs

20170109

BYE BYE 2016, WELCOME 2017

20161201

Planning to start an SME? These tips can help your SME on its growth trajectory

20161005

Planning to buy an expensive home? Here are the things you should know

20160928

Lending institutions may become wary of large loans

20160923

The dark and bright side of ULIPs

20160921

Are banks on their way to come out of NPA mess?

20160916

US Presidential elections and the Indian economy

20160913

Ache din continues to elude the aam aadmi

20160908

Is gold losing its sheen – demand slowing down in India and China?

20160906

Who needs Professional Liability Insurance & Why?

20160905

What if oil climbs back to the $80 or $100 a barrel?

20160822

Top 5 Financial Lies You Need to Stop Telling Yourself

20160810

GST – How does it affect different sectors?

20160407

How to leverage Workmen Compensation Insurance Policy for labor injuries and disputes?

20160224

Union Budget 2016 – What the street expects from the FM

20160129

Child Insurance, Protect what you have

20160128

What Advantages Are There in Investing in the Indian Commodity Market?

20160120

India Needs To Brace Itself For a Predicted Currency War

20160112

January & Sensex: What is the Saga?

20160107

The Importance of Home Insurance

20160107

Secure Your Wealth – An Investment Guide for Beginners

20160105

Making a Travel Insurance Claim: Questions to Ask Yourself

20151218

Why have bonus shares nearly died out in the Indian capital markets?

20151202

10 ways to diligently invest your money

20151126

Are you still in love with Fixed Deposits?

20151123

How systematic are your SIPs?

20151106

Would Shanghai trigger another global economic meltdown?

20151028

How the Chinese market turmoil has impacted the Indian Rupee

20151007

The Fed interest rate hike factor has dimmed again – but has it become laughable?

20150520

Trading vs. investing in Indian stock markets

20150428

Job loss insurance – Your cover for potential pink slips

20150413

How simmering global events can affect Indian capital markets in the coming days

20150406

Is Nifty eyeing 10,000 by the third quarter?

20150226

Union Budget 2015 - Sector Watch

20150224

Budget Day: Why markets need to remain open on Saturday?

20150217

Who gains the most from lower oil prices?

20150122

At $1200 an ounce, is gold a safe bet compared to Indian equities?

20141118

Wondering about the relevance of ULIPs? Probably it is time to rethink!

20141111

Is there a fed rate hike looming over the markets?

20141106

Are the markets heading for a deep correction?

20141105

49% FDI in Insurance Sector: Mixed reactions

20141104

How does the Modi government impact the real estate!

20141021

Sector Prediction for next 5 years: Real Estate

20141016

10 things about coal block allocation that you should know

20141015

In the context of stock markets, what do we mean by long-term?

20141010

Sensex at 27000; Nifty at 8000 - Does D-Street actually justify these big levels?

20141003

5 Safe Post Office Saving Schemes: Safe Zone For Investors

20141003

Afraid of credit card penalties? No more penalties now in 5 simple steps!

20140930

Getting married and worried about financial planning? Drop all worries now!

20140929

Not shopping online? Know what you are missing out!

20140926

5 schemes that are going to save your tax expenditures

20140924

Do you have idle money in your bank account? Opt for Auto FD

20140923

5 reasons that make Maruti cars the most suitable for Indian needs

20140917

The Ukraine Crisis – All that you need to know

20140915

5 major events that pulled Nifty above 8000 mark

20140911

Want to buy a refrigerator or TV? Manage your money by opening a Recurring Deposit account

20140905

10 Incidents That Prove Global Events Impact Indian Markets to a Great Extent

20140904

5 Intelligent Ways To Invest in Mutual Funds

20140903

5 reasons why you should invest in Gold

20140901

A few basic tips to invest wisely in stocks

20140827

SIP –Proxy to Equity Investing?

Page  of 
First Page Previous Page Next Page Last Page
Go to