Professional indemnity insurance, also referred to as professional liability or errors and omissions insurance, provides protection to individuals and companies involved in providing advice or services to customers.
This insurance is designed to cover legal costs as well as claims for damages by third parties arising out of an act, breach or omission during the course of discharge of their professional duty.
This type of insurance is extremely important for white collar consultants and other professional people who give advice as giving the wrong advice can be devastating for clients and those affected. The best way to ensure you are covered is to get a few professional indemnity insurance quotes as that way, you will be able to compare different levels of cover, and make sure you get the right policy for you and your business.
Income Protection Insurance, formerly referred to as permanent health insurance, is a monthly benefit. If you are not in a position to work because of an accident, injury, illness or trauma, then this insurance pays you to help you meet the day-to-day living expenses.
Professional Indemnity Insurance
The primary reason as to why you should have professional indemnity coverage is that the general liability insurance provides coverage in the event of a property damage, bodily injury, advertising injury or personal injury claim.
Other insurance policies provide coverage to the public and employers and for product liability. Products and professional services may not cause any of the specified harms, but can result in other legal claims.
Commonly, professional indemnity insurance covers damages, compensation, interest and costs and defence costs arising out of claims of misrepresentation, negligence, violation of fair dealing and good faith and inaccurate advice.
In general, the types of claims covered by professional indemnity insurance are as follows:
- Libel, defamation or slander against third parties
- Loss of documentation of clients
- Legal liability for damages
- Claimants’ costs/expenses caused by an act, error, omission
- Wrong or inadequate advice given to customers
- Acting in the absence of proper instructions or failing to act according to the customers’ instructions
- Failing to provide advice to customers
- Breach of Fair Trading Legislation or Trade Practices Act
- Breach of statutes
Income Protection Insurance
Income protection insurance pays you till you report back to work (after the specified waiting period). However, if you are incapable of returning back to work, payment is given to you till your retirement age, generally 65, depending on your occupation.
This insurance is designed to make sure that you are paying the mortgage, putting food on your table and able to carry on till you return to your work.
An income protection insurance policy offers several benefits when compared to other insurance policies. The benefits are paid to the policyholder when he/she becomes incapacitated.
However, the payment is made after the deferred period, but continues until recovery of health, retirement, death (as per the terms of the contract), whichever happens earlier.
The insurance company pays the benefits regularly and they cannot refuse to renew or cancel the policy as long as you continue to pay the insurance premiums.
Some of the restrictions to this policy are as follows:
- The insurance company will not pay if you become unemployed because of reasons other than accident or illness.
- The deferred period generally ranges from 4 weeks to as much as 52 weeks.
- Benefits are not payable if accidents or illnesses arise out of alcohol or drug abuse, criminal acts, wars, pregnancy and intentional self-harm.
- If you change your occupation or become unemployed, the insurance policy may not be valid. Sometimes, you may be required to pay a higher premium to cover the new risk.
If you are a professional who provides advice or running your own business, it is important to have both professional indemnity insurance and income protection insurance.
This is because they provide some protection to your earnings in the event of third party damages claims or you becoming incapacitated because of an illness or accident.
For more information about the differences between PI insurance and Income protection, check out the insurance information resource acay.com.au as this site provides a free quoting and advice resource for any professional seeking insurance.