Professional Indemnity Policy for Lawyers
For any individual or business entity that provides consultation or professional advice to clients, professional indemnity insurance is very valuable. Lawyers, advocates, counsels and solicitors are no different. The complexity of their job, high dependence upon their professional advice, and increased awareness of legal rights have made this profession very challenging. The changing dynamics of the corporate legal scenario in the current environment call for a professional indemnity policy for lawyers.Read more
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What is Professional Indemnity Insurance?
Professional Indemnity Insurance, also known as Errors & Omissions Insurance, Professional Liability Insurance or PI insurance, is a type of liability insurance. It provides coverage for professionals and business entities in case of financial consequences arising out of negligence, error or omission, etc.
If a client, customer or any third party alleges the insured against a breach of professional duty, mistake or wrong-doing, professional indemnity insurance can come to the rescue. It helps protect the professional financially and in terms of business reputation. This insurance is usually taken by doctors, lawyers, accountants, consultants, or any professional individual or firm providing professional advice to clients.
Professional Liability Insurance includes:
- Professional negligence
- Loss of documents
- Bodily injury or damage to the property
- Legal costs and expenses
- Public relations (PR) expenses
Why Do Lawyers Need Them?
Providing professional advice or consultation is a risky job. Especially where there are legalities involved. Thus, a professional indemnity policy for lawyers has become essential. This insurance type provides coverage to the lawyers or law firms against negligence claims, wrong-doing or malpractices.
A professional indemnity policy for lawyers is specially designed to protect them from financial losses arising from alleged mistakes arising from their practicing or lawsuits filed by clients.
These tailor-made policies are typically made on a claims-made basis. That is, claims made during the period when the policy is active are covered. Claims like incidents of carelessness or malpractice that arise before the coverage is are usually not covered.
What Does Professional Indemnity Policy for Lawyers Cover?
In the article above, we have seen what all does a general professional indemnity policy cover. However, some insurance companies offer professional indemnity policies for lawyers and law firms.
Professional indemnity insurance for lawyers will provide relief to your law firm by covering expenses such as:
- Attorney fees: If another law firm is hired to handle the case, the rate charged is usually very high depending on the complexity of the lawsuit.
- Settlements: Sometimes the dispute is settled out of the court. However, depending on the case, the insured may still have to pay the complainant.
- Administrative costs: A professional indemnity policy for lawyers can help cover costs, such as software, photocopy charges, shipping, etc.
- Court costs: Costs incurred while filing documents and other related services at the court.
- Judgments: In case the lawyer loses the trial, payment needs to be made for the court judgment. This policy provides financial support for that as well.
As a lawyer or a law firm, it is very essential to invest in professional indemnity insurance. It might not be a mandatory requirement, but a professional indemnity policy for lawyers is highly recommended in this changing socio-economic environment. It is critical for all law firms to have this insurance to guard against unforeseen circumstances.