What is indemnity insurance? How does indemnity insurance work? What is the importance of indemnity insurance and why you should buy one? These questions will be answered as you go through the content of this piece.
We discussed extensively what indemnity insurance means, how indemnity insurance policy works, and why it is important to get indemnity insurance. So, let’s do a definition of terms.
What is Indemnity Insurance?
Indemnity insurance is an insurance policy which guarantees compensation for losses and any potential damage made on a party by the actions of another party. The insurance policy is designed to pay compensation and cover any legal liability that may arise as a result of damages caused by a party on another.
People or professionals who should get an indemnity insurance policy are those who offer professional services and advice. Their clients may suffer losses or damages upon heeding to their advice or while engaging in the services they offer. They may decide to file lawsuits against the professional demanding compensation.
For events such as misjudgment, incorrect estimations, or predictions, a professional will be held accountable when a client suffers losses based on these undoing.
No matter the expertise and skill of the professional, you will not always have a 100 percent performance rate or customer satisfaction. Hence the need to get indemnity insurance.
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How Indemnity Insurance Works
Indemnity insurance (also known as professional liability insurance) is a form of liability insurance exclusively reserved and designed for professional consultants and service providers in the United States. It is a comprehensive form of insurance that will pay for damages and losses. It also refers to an exemption from liabilities arising from damages.
Professional consultants offer advice, predictions, and estimations to clients. These clients may suffer losses or damages when they follow or adhere to the advice and predictions of the consultants. Having suffered losses or damages, the clients may sue the consultants and file lawsuits against them.
As a consultant, due to negligence or one failure or the other, your clients may become victims of unfavorable events. Normally, lawsuits and legal claims will be filed against you. This type of business insurance protects you against these claims and lawsuits.
Your indemnity insurance will pay for litigation costs, legal fees, court settlements, damages awarded by the court, and other lawsuits costs.
Very importantly is the fact that professional indemnity is an insurance cover for all businesses and health personnel to hold according to the law. By law, one of the requirements for doing business is the indemnity insurance cover.
With that, let’s look at the key importance of indemnity insurance? Why should you buy an indemnity insurance policy?
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4 Major Importance of Indemnity Insurance
These are some of the reasons why indemnity insurance cover is important for your business as a consultant or a professional in the U.S. who offers advice and counsel to clients.
1. Protection against claims of negligence, malpractice, and professional misconduct
As part of your services as a business consultant, your job is to offer expert opinions and solutions to the client’s needs and challenges. What they expect from you is top-notch professionalism, expertise, and specialist knowledge.
Your client does not expect anything to go wrong. They expect that by contacting you, they would enjoy the best services and get their needs resolved appropriately and on time. When something goes wrong, you need no telling that you will be having the lawyers at your doors. Unhappy clients will immediately file lawsuits against your business should they suffer any loss or damage after consulting with you or adhering to the counsel you offered.
Professional indemnity provides protection for your business consultancy against legal actions that may be leveled against you.
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2. Professional Outlook for Your Business
Indemnity insurance gives your US-based business a positive outlook in the eye of the general public. You will be considered for partnership and patronage when you possess certain insurance covers. One of such insurance covers is an indemnity insurance policy.
If clients know that you own indemnity insurance which can take care of possible, potential risks that may occur consequent upon working with you, it will spur them to do so. There is so much uncertainty in the world today and people will be quick to work with you knowing their losses and damages are covered for.
3. Protection against third-party injury and property damage
You are at risk of lawsuits and legal actions if during the cause of your business activity you get somebody injured or you cause damages to property at a client’s place. Indemnity insurance protects you against claims from customers and third-parties by providing compensation and lawsuit defense costs.
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4. The Best Can Still Make Mistakes
Even though you graduated with flying colors from Harvard University or you have bagged three MBAs from business schools, you are still prone to making mistakes and errors. Notwithstanding, you can still thrive doing business without worrying about lawsuits from client’s who suffered a loss or damage after consulting with you.
Enjoy a hitch-free, seamless work process without having to sweat about legal fees and compensations when you have an indemnity insurance cover.
Get your business insured today by getting indemnity insurance. If you do, you would have succeeded at overcoming most of the challenges facing insurance policyholders in America.