Professionals such as lawyers, accountants, notaries, architects, engineers and doctors owe a duty of care to their clients who might reasonably rely upon the service or advice the professional provides. Therefore, a professional can be held legally liable to provide compensation if a third party suffers a loss as a result of any professional negligence.
The costs for the professional in such an eventuality can be very high. Even locally, it has become more commonplace for clients to press charges against professionals and a number of hospitals have been ordered to pay up after being found guilty of medical malpractice.
So how can professional indemnity insurance protect and provide peace of mind to a professional?
A professional indemnity insurance policy protects insured professionals from claims made against them by third parties for injury, loss or damage as a result of any negligent act, error or omission while they were providing professional services. Apart from the compensation payable, the policy also covers claimants’ costs and legal expenses incurred in the investigation, defence and/or settlement of a claim.
Even if the lawsuit is completely baseless, a professional could suffer large financial losses to defend against such claims
It is inevitable that sometimes mistakes occur at work, but some mistakes may have severe and very expensive consequences.
As a professional, it is of paramount importance to assess one’s risk and consider coverage.
In particular, in the case of an independent practitioner, he/she would not have the financial resources of a big company to pay for damages in the event of a client lawsuit.
Professionals must keep in mind that whereas they may be satisfied with their work, their business could face sizable claims for compensation and legal defence costs if it does not meet client expectations.
Even if the lawsuit is completely baseless, a professional could suffer large financial losses to defend against such claims. Professional indemnity insurance that protects professionals from a potentially disastrous financial loss is in fact increasingly being considered imperative by professionals locally.
Local insurance companies offer professionals guidance when they come to choose the coverage that works best for them. An important consideration is undoubtedly determining a limit of indemnity (which would be the maximum amount payable in the event of a claim) that is commensurate to the risk carried by the profession one performs.
For example, in the medical professional field, the risks faced by a cardiac surgeon could be far greater than the risks faced by a radiographer and, therefore, the financial losses caused by a negligent error or omission could potentially be greater.
It is advisable for professionals interested in seeking coverage to discuss their individual requirements and potential risks with their insurance provider in a tailored approach.
Judith Galea is the head of the Mapfre Middlesea Birkirkara Regional Office.
www.middlesea.com