Professional Indemnity Insurance

Professional Indemnity Insurance protects professionals such as Doctors, Architects, Chartered Accountants, etc. for committing any error or negligence while providing their services that cause any loss or damage to their clients.

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Explore Types of Professional Indemnity Insurance

Why Professional Indemnity Insurance is an Important Purchase?

Professional Indemnity Insurance is important for the following reasons:

  1. Protects your Financial Position if a Claim is Made

    In the event of a claim or legal action against your business, professional indemnity insurance provides financial protection by covering legal expenses, settlement costs, or damages awarded.

  2. Ensures Coverage for Businesses of All Sizes

    Whether you run a small startup or a large corporation, professional indemnity insurance offers coverage that is tailored to your specific business needs, mitigating the risks associated with professional services.

  3. Offers Peace of Mind Knowing your Organization is Protected

    Having professional indemnity insurance in place provides peace of mind, knowing that your organization is safeguarded against potential liabilities and unforeseen circumstances that could arise from professional mistakes or negligence. It allows you to focus on your work without constant worry about potential legal or financial repercussions.

    Regardless of the experience in your profession, the potential for mistakes always exists. In such cases, professional indemnity insurance is essential. You may need this insurance if you are:

  4. Handling Clients or Business Data

    If your business deals with sensitive client or business data, there is a risk of data breaches or loss. Professional indemnity insurance can provide coverage for the financial consequences resulting from data mishandling.

  5. Providing Advice or Guidance to Clients

    Professionals who offer advice or guidance are exposed to the risk of errors or omissions that can lead to financial harm for clients. Professional indemnity insurance covers claims arising from such situations.

  6. Vulnerability to Claims Challenging Professional Work

    Professionals are vulnerable to claims challenging the quality or effectiveness of their services. Professional indemnity insurance safeguards against financial losses resulting from legal actions taken by dissatisfied clients.

What does Professional Indemnity Insurance Cover?

Professional indemnity insurance covers the following:

  • Costs and expenses including defence costs and legal costs
  • Unintentional breach of contract
  • Unintentional breach of confidentiality
  • Defamation including libel and slander
  • Fraud/Dishonesty of employees
  • Infringement of intellectual property and copyright
  • Loss of documents and data

Coverage under Professional Indemnity Insurance


Professional Indemnity Insurance does not Cover


Tail Reporting Coverage

Tail reporting cover is an add-on that the insured can purchase along with professional indemnity. It is also known as extended reporting endorsements cover, which is a type of insurance that covers the incidents that occurred within the tenure of the indemnity insurance but were not reported until the termination of the policy.

Extended coverage is offered by some insurance companies if the insurance policy remains non-renewed for that time. Of course, the extended coverage gives rise to the premium, which has to be paid if the tail reporting coverage needs to be used for claims.

Professional Indemnity Insurance Policy - Limit of Indemnity

Let us now tell you about the Limit of Indemnity in the professional liability insurance policy:

  • The sum insured in professional indemnity insurance is known as the Limit of Indemnity.
  • This limit is set per accident and per policy period.
  • It is referred to as Any One Accident (AOA) limit and Any One Year (AOY) limit respectively.
  • The ratio of AOA limit to AOY limit can be chosen.
  • The AOA limit, which is the maximum amount payable for each accident, should be predetermined.

The ratio options for AOA limit to AOY limit, what it means and examples related to each of them are mentioned in the table below:

Limit of Indemnity Meaning Example
1:1 Full sum assured for any one claim. If the insured has opted for the sum insured of Rs. 1 Crore and if a claim arises during the policy tenure then the insured can get coverage up to Rs. 1 Crore for 1 claim.
1:2 Maximum 50% of the sum assured for any one claim. If the insured has opted for the sum insured of Rs. 1 Crore and if a claim arises during the policy tenure then the insured can get coverage up to Rs. 50 Lakh for 1 claim and up to Rs. 50 Lakh for one more claim.
1:3 One-third of the sum insured for any one claim. If the insured has opted for the sum insured of Rs. 1 Crore and if a claim arises during the policy tenure then the insured can get coverage up to Rs. 33.33 Lakh for 1 claim and can get coverage up to Rs. 33.33 Lakh for two more times respectively.
1:4 25% of the sum insured for any one claim. If the insured has opted for the sum insured of Rs. 1 Crore and if a claim arises during the policy tenure then the insured can get coverage up to Rs. 25 Lakh for 1 claim and can get coverage up to Rs. 25 Lakh for three more times respectively.

Note 1: The AOA limit should be determined based on factors such as the insured's nature of the activity, the potential number of people affected, and potential property damage in the worst-case accident.

Note 2: When considering the coverage, it is important to assess the adequacy of the sum insured and the chosen extensions.

You may also read: Indemnity Insurance for Chartered Accountants

Professional Indemnity Insurance: Exclusions

Professional liability insurance does not provide coverage for the following:

  • War, Invasion, Acts of Foreign Enemies: This policy does not cover losses resulting from war, invasion, acts of foreign enemies, civil unrest, government actions, or related conditions.
  • Known or Reasonably Foreseeable Situations or Incidents: Situations or incidents that the insured knew about or could have reasonably foreseen at the start of the policy.
  • Previously Reported Situations or Incidents: Situations or incidents that have been reported under any other insurance before the start of this policy are excluded from professional indemnity cover.
  • Fines & Penalties: The policy does not cover fines, penalties (civil, criminal, or contractual), punitive damages, exemplary damages, treble damages, or any other damages that exceed compensatory damages or are uninsurable by the law of the land.
  • Losses from Specific Substances & Disease: Losses arising from substances such as asbestiform talc, asbestos, diethylstilbestrol (DES), dioxin, urea formaldehyde, or acquired immune deficiency syndrome (AIDS) are not covered under professional indemnity insurance.
  • Losses due to Prohibited Acts or Omissions: The policy does not cover losses caused by dishonest, fraudulent, criminal, or malicious acts or omissions. It also excludes losses resulting from violations of laws or ordinances, as well as services provided while under the influence of intoxicants or narcotics.
  • Losses resulting directly or indirectly from:
  1. Ionizing radiations or contamination caused by radioactivity from nuclear fuel or nuclear waste.
  2. The radioactive, toxic, explosive, or other hazardous properties of any explosive nuclear assembly or its components.
  3. Nuclear reactors, nuclear power stations, plants, premises, or facilities involved in nuclear energy production, or the production, storage, or handling of nuclear fuel or waste.
  4. Any other premises or facilities covered by a local nuclear pool or association's insurance.
  • Insolvency or Bankruptcy: Any claim resulting from the insolvency or bankruptcy of the insured.
  • General Liabilities: This plan does not cover regular accidents that occur outside of your work or workplace. For coverage in such cases, General Liability Insurance is required.

*Disclaimer: To learn about the exclusions in detail, you can refer to the policy wording of the insurance product.

Who can Purchase Professional Indemnity Insurance?

Professional indemnity or Errors and Omission insurance can be availed by individual professionals or by companies providing professional services. Here is a table of individuals and entities that can purchase professional indemnity insurance:

Individual Entities
PI for Doctors
PI for Architects
PI for Lawyers
PI for Chartered Accountants
PI for Contractors
PI for Management Consultants
PI for Interior Decorators, etc.
PI for IT/Ites Companies
PI for e-commerce
PI for Fintech
PI for Manufacturing Company
PI for Banks
PI for Hospitals, etc.

Factors to Consider When Purchasing Professional Indemnity Insurance:

Here are certain factors that you should keep in mind while purchasing indemnity insurance:

  1. Decide on the Right Sum Insured

    Choose an appropriate sum insured based on the nature and magnitude of risks associated with your business, ensuring adequate coverage for potential claims.

  2. Be Transparent with Information

    Full disclosure is crucial when obtaining insurance. Provide all relevant details, no matter how insignificant they may seem, to avoid claim rejection and ensure the effectiveness of the insurance policy.

  3. Align Insurance Features with Business Needs

    Ensure that the insurance policy's features align with your business requirements. If your business deals with international clients, opt for a policy that provides coverage beyond domestic borders to meet your specific needs.

How Professional Indemnity Insurance Works?

Here’s how it works:

  • Claims may arise due to your or your employee’s negligence, errors, etc., while rendering professional services to clients, leading to significant financial losses to your business.
  • Professional indemnity coverage is mainly provided on a claims-made basis, i.e. it will typically cover claims related to incidents that occurred or were discovered during the policy period.

Here’s a condition:

  • Any claims filed for an incident that occurred before the retroactive date of the policy coverage may not be covered by the insurance company.

Professional Indemnity Insurance: Triggering Event

A triggering event for professional indemnity insurance is typically when a claim is made against the insured for an alleged error, omission, or negligence in their professional services. Let's consider a case scenario to understand this:

Case Scenario:

Dr. Sharma is a surgeon who specializes in orthopedic procedures. He has a professional indemnity insurance policy in place. One day, Dr. Sharma performs a knee replacement surgery on a patient, Mr. Varun. However, during the surgery, Dr. Sharma inadvertently makes an error, resulting in complications for Mr. Varun.

As a result of the surgical error, Mr. Varun experiences prolonged pain, limited mobility and requires additional medical treatment and rehabilitation.

Dissatisfied with the outcome, Mr. Varun decides to take legal action against Dr. Sharma, claiming medical negligence and seeking compensation for the damages he has suffered.

In this scenario:

  • The triggering event for Dr. Sharma's professional indemnity insurance occurs when Mr. Varun files a claim against him, alleging professional negligence.
  • Dr. Sharma notifies his insurance provider about the claim, and the insurer initiates the claims process.
  • The professional indemnity insurance coverage is triggered, and the insurer begins investigating the claim and assessing its validity.
  • If the claim is deemed valid, the insurer may provide financial coverage for legal expenses, settlement costs, or damages awarded to Mr. Varun, up to the policy's specified limit of indemnity.

***It is important to note that professional indemnity insurance coverage is typically triggered when a claim is made during the policy period, regardless of when the alleged incident actually occurred.

Professional Indemnity Insurance: Claim Process

Here is what you have to do in case of an incident that requires you to raise a claim:

  • Step 1: Inform the Policybazaar claim handler about the incident.
  • Step 2: The claim handler will send a sort of claim intimation format which you will have to fill and submit to him only. You will have to provide the below-mentioned details.
    • Policy No.
    • Insurance Company Name
    • Policyholder’s Name
    • Address of the Policyholder
    • Date of Incident
    • Brief detail of the Incident
    • Estimated loss amount
    • Address of the site of the incident
    • Name & Contact details of the person at the site of the incident.
  • Step 3: Once you send these details to the claim handler, the claim handler will send it to the insurance company.
  • Step 4: After going through the submitted claim intimation format, the insurance company will register the claim and generate a claim reference number.
  • Step 5: After generating the claim reference number, the insurance company will depute a surveyor or share the List of Requirements (LOR) in order to proceed further with the claim process.
  • Step 6: The insurance company will send a claim form that you will have to fill up, sign and stamp with the company seal and then submit it along with the LOR. (In the case of individual professionals, if they have a seal then they can use that to stamp on the claim form). Here is the basic list of documents required.

    KYC Documents Required

    • PAN Card
    • Aadhar Card
    • GST Registration Certificate
    • Address proof of the location of the incident
    • Electricity Bill

    Disclaimer: These are the basic documents required. However, in case of any additional requirement/LOR, the insurance company will inform the Policybazaar claim handler who will then inform and help you in collecting and submitting them to the insurance company.

  • Step 7: It depends on the insurance company whether they will send a team of surveyors to the site of the incident to check the validity of the incident or not.
  • Step 8: Now if there is a court case going on already then all the case related details need to be shared with the insurance company.
  • Step 9: Once the court case ends and the judge finalises the compensation amount in the court’s final verdict, the insurance company will have to pay that amount to the insured as per the policy terms and conditions.

Disclaimer: There is a particular percentage of the sum insured amount decided up to which the insured gets coverage for the lawyer’s fee. (Example: If the sum insured amount is Rs. 100 and the lawyer’s fees are covered up to 25% of the SI then the insured will get lawyer’s fee coverage for up to Rs. 25 and not more than that. It is subject to the terms and conditions of the insurance policy)

Also, in some cases, if the insurance company wants, they can deploy their lawyer in service of the insured, however, if the insured has already deployed his lawyer then the coverage will be provided as per the above-mentioned condition.

What is the Retroactive Date in Professional Indemnity Insurance?

The retroactive date is the date that the insured first bought the policy and kept renewing without any break in the coverage.

Let's take an example to illustrate the concept more clearly:

  • A doctor purchased a professional indemnity insurance policy from XYZ Insurance Company on January 1, 2020. The policy was valid until December 31, 2020.
  • However, the doctor was dissatisfied with the coverage provided by XYZ Insurance Company and decided to switch insurers. To ensure continuous coverage without any gaps, the doctor promptly renewed the professional indemnity insurance policy from ABC Insurance Company, which came into effect on January 1, 2021.
  • In this scenario, January 1, 2021, becomes the new policy's inception date, while the retroactive date stays as, January 1, 2020,
  • Now, let's say a claim arises from an incident that occurred when the doctor was covered under the professional indemnity policy of XYZ Insurance Company, specifically on June 1, 2020.
  • Since there was no gap between the two policies and the new insurer, ABC Insurance Company, ensured continuous coverage, they will provide coverage for the claim arising from the period when the doctor was insured under the old policy from XYZ Insurance Company.

Transferring Retro-active Date from Old Insurer to New One

Transferring retroactive date from the old insurer to the new one refers to the point when the new insurer takes the responsibility to provide coverage for any claim that might come up from the policy tenure of the old one.

*Condition: There should be no gap between the old policy and the new one.

What is Professional Indemnity Insurance for Doctors?

Professional indemnity insurance for doctors provides specialized coverage against claims for negligence, errors, or omissions in their services. It safeguards doctors from financial losses and allows them to focus on quality care without constant litigation concerns. The insurance includes legal defense, settlements, and damages, up to the policy limit.

Professional Indemnity Insurance- FAQs

  • Question 1: What is Professional Indemnity Insurance?

    Ans: Professional indemnity insurance provides coverage against claims for loss or damage that may arise from the consequences of your negligent services or advice, filed by clients or third parties.
    Even if you have provided services or advice free of charge, you can still be subject to compensation claims.
    For example: Imagine a surgeon making a mistake during surgery, causing harm to the patient and the patient decides to sue the surgeon. Professional indemnity insurance will cover the doctor's legal liabilities arising from this error.
    However, in the case of service sector companies, if any of the customers sustains any loss or damage due to the services provided by the company and decides to sue the company then the company will get coverage under indemnity insurance.
  • Question 2: Is Professional indemnity insurance mandatory?

    Ans: No, it is not mandatory but recommended by insurance providers due to the kind of coverage it provides.
  • Question 3: How is the cost of professional indemnity insurance determined?

    Ans: The cost of professional indemnity will be based on certain factors such as the nature of work you do, the risk involved, the number of employees you have or the level of cover or sum insured you require.
  • Question 4: How long does professional indemnity insurance last?

    Ans: Professional indemnity insurance lasts for a period of one year and you will have to renew it before it lapses to get uninterrupted coverage.
  • Question 5: What is Professional indemnity insurance meaning?

    Ans: This is a type of insurance policy designed to provide financial protection to individuals or organizations in the event of unforeseen damages or losses. Under this insurance, the insured party is reimbursed for their specific losses, typically up to the limit specified in the policy, which is often equal to the amount of the loss itself. In exchange for this coverage, insurance companies require the payment of premiums from the insured parties.
  • Question 6: What is medical indemnity insurance?

    Ans: Medical indemnity insurance or medical indemnity insurance for doctors or indemnity insurance for medical professionals, these are similar insurance policies that are designed to provide coverage for legal liabilities arising due to negligence, error or omissions causing loss or damage to the patients.
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Policybazaar for Business - Professional Indemnity Insurance - Customer Reviews
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4.5 April 24, 2023
Helpful Purchase
Profesiona Indemnity Insurance has been a game-changer for my consultancy business. It has given me the confidence to take on new projects and expand my services, knowing that I have robust coverage in place.PolicyBazaar has been fantastic in answering my questions and tailoring the policy to my specific needs.Thanks PolicyBazaar.
3.5 April 12, 2023
Amazing Deals
I recently purchased Professional Indeminty Insurance from PolicyBazaar and the claims process is smooth, and has always been prompt in resolving any issues or concerns I've had. I appreciate the reliability and professionalism they exhibit.
3.8 March 31, 2023
Online Purchasing
Profesional Indemnity Insurance has been a lifesaver for my business. It offers comprehensive protection against any claims that may arise from errors or negligence on my part. The claims process was straightforward, and they handled everything efficiently. I highly value the peace of mind this insurance provides and would recommend it to any professional.
4.3 March 13, 2023
Impressive Features
I had an excellent experience while buying Personal Indemnity Insurance. It was quick and easy to get a quote online and the premiums were quite affordable. The policy covers all the essential aspects, and the customer service team was responsive and supportive. I feel much more confident in my work knowing that I have this coverage
3.8 March 01, 2023
Helped To Secure Confidential Data Of Company
As a Owner I had a high risk of loss of confidential data. Then my colleague suggested me go for PI Insurance at PolicyBazaar. So I visited their website and contacted the team. They answered all my queries, and when I got satisfied with the plan, I made a purchase. Thanks, PolicyBazaar.
4.3 February 17, 2023
Covers Legal Expenses
There was a party that made a claim against us for professional negligence by one of our employees. Thanks to PolicyBazaar which helped me protect our financial position and helped us during the claim process that covered our Legal expenses and Settlement cost. Highly Recommend this.
4.3 February 05, 2023
Covers The Risks
I bought Professional Indemnity Insurance from PolicyBazaar, as I was looking for insurance that could mitigate my risk associated with several professional services. Thanks to PolicyBazaar. It was worth buying. Highly Recommend it.
4.3 January 24, 2023
Helps Me To Focus On My Work
I was always concerned about my organization in order to safeguard against potential liabilities and unforeseen circumstances that could arise from professional negligence. So I bought PI Insurance at Policybazaar and found it good as it helped me to focus on my work without worrying about financial repercussions. So thanks to PolicyBazaar.
3.8 January 08, 2023
Amazing Deals
I bought Professional Indemnity Insurance from the PolicyBazaar website and found it suitable for my business. I run a small company. I got terrific Deals at PolicyBazaar. It was an excellent Purchase. Thankyou PolicyBazaar.
4.3 December 14, 2022
Doctor Vishal
Covers Professional Negligence
As a Doctor, I was searching for Professional Indemnity Insurance that could provide me coverage against claims for Negligence in my services. Then I visit PolicyBazaar Website. There I came across several benefits. So I made the purchase there. Thanks, PolicyBazaar.

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