What Is Professional Indemnity Insurance, and Why You Most Probably Need It

We’ve been getting a few inquiries about our professional indemnity coverage (often known as Professional Liability or PI Insurance), so we thought to share some info on what it covers, and why you most probably need it.

So What is Professional Indemnity Insurance (PII)?

It is essentially a business risk management insurance designed to cover legal costs, compensation, and lost income, in the case you are deemed to have provided inadequate advice, design or services, i.e. professional negligence or mistakes that caused your client to lose money.

Who Will Need This Coverage?

While the PI insurance might not a legal obligation in most professions(unlike WIC Insurance), it provides a valuable coverage for your “worst case scenarios” across a multitude of industries.

Construction and design companies come immediately to mind, yes – but you’ll be surprised by the wide range of professions that PI insurance is also recommended for.

Here are some professions:

• Bookkeepers and company secretaries
• Real estate agencies and agents
• Media industry such as television/radio stations, broadcasters, publishers, graphic designers, printers, advertising and public relations agencies, etc
• Consultants in all major industries (HR, IT, Banking, Security etc)
• Ancillary medical professionals such as therapists, nutritionists, optometrists, pharmacists, chiropractors, and acupuncturists
• Health and wellness operators(spa, gym etc), travel agencies, and security guard companies

Scenario 1:

On August 2002, a tilt on the building was detected by Samsung Corporation. The building sank 3 mm to 39 mm on one side, between August and November 2002. Although this 0.1 degree tilt, (caused by soil settlement) was minimal compared to 4 degrees for the Leaning Tower of Pisa, it could have adversely affected the building’s structural stability, resulting in cracks or severe damage had it not been corrected.

After discovering the tilt, Samsung had immediately initiated rectification efforts, but it took a total of 2 years to complete, which caused many issues with the multiple companies involved.

It would have been especially more disastrous if Samsung was not covered sufficiently by Professional Indemnity Insurance.

Scenario 2:

PI Insurance is also applicable to the medical field, in the case of medical negligence or malpractice.

It can be as simple as a misdiagnosis where you read a laboratory report wrong, resulting in the patient having an unnecessary surgery, with a loss of body part or future long-lasting side effects. It can also be surgical errors, where the wrong site was operated, or an error in prescription, resulting in death.

For either scenarios, PI insurance do not only cover legal (but wrongful) charges brought against you, but also potential compensations for a lapse in judgement on your end. This coverage is especially important if you’re in a position liable for someone’s well-being, or giving business advice in a high-risk/high investment industry.

What Professional Indemnity Insurance Covers:

In essence, PI insurance covers:

• Any claims for civil liability in your business conduct,
• defamation suits,
• accidental negligence, and
• legal fees.

How Much Does It Cost?

Depending on the risk factor, coverage you need, and preferred excess, a PI insurance premium may start from as low as S$1,000.00 (GST exclusive) per annum.

You can choose between “aggregate policy” or “per claim policy”. 

“Aggregate Policy” vs. “Per Claim Policy” (Upon Claim Settlement)

In an “aggregate policy”, if you choose to get covered for S$500,000 limit of liability, this policy will pay up to a maximum of $500,000 during the policy period regardless of the number of claimants/cases. Any remaining sum will have to come out from your own pocket.

On the other hand, in a “per claim/any one claim policy”, it will pay up to S$500,000 per claim/case during the policy period.

How Can We Help You?

We are team professionals and experts in PI insurance. We would be happy to discuss with you on your insurance needs. You can just simply drop us a message below, or call us at 6294 6688 for any assistance!