What is Professional indemnity insurance?
Professional Indemnity Insurance (PII), also known as Errors and Omissions (E&O) insurance, is a type of liability insurance that protects professionals against claims of negligence, errors, or omissions that occur while providing their services. It is designed to cover legal costs and compensation that may arise from lawsuits filed by clients or third parties alleging that the professional made a mistake, gave incorrect advice, or failed to deliver services as expected.
PII is particularly relevant for professionals such as lawyers, accountants, consultants, architects, and financial advisors, who offer specialized advice or services and face the risk of claims from clients dissatisfied with their work.
Key Features of Professional Indemnity Insurance
- Coverage for Negligence and Errors: PII protects professionals from the financial consequences of making errors or providing substandard services. For example, if an accountant makes an error in financial reporting that leads to a client’s financial loss, PII would cover the legal costs and any damages awarded.
- Legal Defense Costs: Even if the claim is unfounded, PII covers the legal expenses involved in defending the case. This can include lawyer’s fees, court costs, and settlement expenses.
- Claims Made Basis: PII is typically offered on a “claims-made” basis, meaning the policy covers claims made during the policy period, regardless of when the incident occurred. This is important for professionals, as claims may arise long after services were provided.
- Professional Advice and Services: The coverage typically extends to claims arising from the provision of professional advice, services, or expertise. It can include errors in judgment, omission of important information, or a failure to meet industry standards.
Professional Indemnity Insurance in Switzerland
In Switzerland, Professional Indemnity Insurance is a common requirement for various regulated professions such as legal services, healthcare, financial advisory, engineering, and architecture. While PII is not mandatory for all businesses, many professional associations and regulatory bodies require it as part of their ethical or licensing standards.
Swiss professionals and businesses offering services to clients benefit from having PII in place to mitigate the risks of legal action, claims for damages, or disputes arising from their work. Swiss law generally provides a favorable framework for enforcing professional indemnity claims, and insurers in Switzerland offer specialized policies tailored to different professions.
In Switzerland, PII helps professionals maintain credibility and client trust by providing assurance that financial protection is in place in case of a claim. This can be especially important for businesses looking to expand internationally, as they can demonstrate that they have the necessary coverage to handle potential risks.
Having Professional Indemnity Insurance not only protects individuals and businesses but also enhances reputation by ensuring that clients feel secure knowing that they are protected from the consequences of professional mistakes or oversights.