Five Smart Things to Know About Professional Indemnity Insurance

Under section 124 of the Indian Contract Act 1872, professional liability insurance is a contract between an insurer and the insured where the insurer is duty-bound to save the insured against any losses caused by discharging professional duties toward the clients. Professional indemnity insurance, also known as professional liability insurance, is only applicable if the insured party unintentionally has committed the wrongful act which is inspected by the insurer before providing coverage.

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Let us discuss the five smart things to know about professional indemnity insurance.

Scope of Professional Indemnity Insurance

Professional indemnity or professional liability insurance is only meant for professional workers such as lawyers, doctors, chartered accountants and engineers. It has nothing to do with the occupational worker or employee of a company. Instead, it covers the cost of all negligible acts that professionals may undertake in the course of their contract.

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This coverage is only for following professionals:

  • Doctor/Medical Practitioner
  • General Physician
  • ₹20Lacs
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  • ₹30Lacs
  • ₹35Lacs
  • ₹40Lacs
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  • ₹75Lacs
  • ₹1Crore
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For example, a Doctor may avail of DPI (Doctor Professional Indemnity) insurance, where the insurer will cover all the losses incurred by the doctor while performing his duties. Similarly, a Lawyer and Chartered Accountant may also avail of professional liability insurance in order to get indemnified against the wrong pieces of advice, which may cause loss to their clients.

Applicable for Unintentional Damage

An insured can only claim the losses if they occurred due to omissions and unintentional errors. Unfortunately, errors and omissions occur in the medical and legal professions. Hence, the doctors and lawyers may be compelled to discharge their liability to a third party person.

In this situation, they may escape from their liability by purchasing a professional indemnity insurance policy. It is important to note that if the act of negligence has been caused due to the influence of an intoxicant substance, the insurer is not liable to indemnify the insured party.

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Loss Caused to the Third Party

The indemnity insurance claim can only be executed if a third party has suffered from a loss. For example, if the hospital faces litigation prosecution due to the negligible act of a surgeon, the insurer is not bound to indemnify the hospital. Nevertheless, if any legal action has arisen against the surgeon, the insurer may provide a panel of lawyers to the surgeon and indemnify him against the order or judgment of a court in favor of the victim.

Similarly, if a client of a chartered accountant or lawyer suffers from damage due to their advice, the insurer is liable to indemnify them against the losses.

Professional Indemnity Insurance is only meant for Civil Liability

Any liability arising from a criminal act or any act that has been committed by the insured is in violation of the law or rules established by the legislation; the insurer is not bound to indemnify the insured. Accordingly, such liabilities are not entitled to cover under insurance of indemnity.

Listed below are the liabilities which can be covered under the professional insurance policies:

  • Tort
  • Breach of contract
  • Punitive monetary damages, or
  • Any other liability which are not subjected to punishments under criminal law, but are blameworthy to fine and compensation under civil law.

Professional bodies

The professional insurance policy is not only meant for professional workers. For example, professional bodies such as law firms, hospitals, or IT companies can also get indemnified under the professional insurance policy. Generally, the hospital and companies get sued for the negligible act of the employee. Hence, they may claim protection under professional insurance policies.


Professional indemnity insurance is a necessity for every professional worker. Unfortunately, the cases against professional bodies and workers are rising and taking place on a daily basis. Hence, it is important for them to get indemnify by purchasing indemnity insurance policies. A third party may also communicate to the insurer without the insured for settlement of claim.

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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.