Professional Indemnity Insurance Hong Kong, pi insurance

There are various professionals in the working environment, each with a different purpose and duty. Some professionals provide products, and some provide services. Professionals who provide services have a serious responsibility to their clients. These professionals include doctors, financial consultants, architects, personal trainers and many more.

Their duties include instructing their clients with their expert knowledge in their field. For example, a doctor will advise their patient on what illness they have and what medication they should take. They are liable for their service and how it impacts the client. Although, at the end of the day, they are only humans, and errors do happen.

These errors and omissions can significantly negatively impact the professional and the business. In many cases can even lead to lawsuits, fines and loss of professional licences. These risks are why there has been an increase in professionals purchasing professional indemnity insurance (PI) to protect themselves against these claims and save them from a sizeable financial loss. The article will explain why Professional Indemnity Insurance (PI) is crucial for many service providers.

What is Professional Indemnity Insurance (PI)? 

Professional indemnity insurance (PI), also known as errors and omissions insurance (E&O)- provides coverage for professionals and businesses to protect against claims of negligence from clients or customers. PI policies will cover the insured against loss from any claim(s) made during the policy period because of any covered error, omission or negligent act committed by the insured’s professional business.

In addition, professional indemnity insurance helps cover claims of negligence, misrepresentation, inaccurate advice, and more. It is not easy to predict claims and mistakes as a business or a professional, but it is easy to be protected with professional indemnity insurance.

How Does Professional Indemnity Insurance Protect Professionals?

Negligence Claims

professional indemnity insurance policy, Negligence, business liability insurance

When a client provides payment to a business or professional, they expect and deserve the best quality service in that field. There are cases where a professional may be held liable for negligence.

Negligence is when a professional or business has failed to carry out the duty of care to clients. Therefore, it’s basically when a professional doesn’t do what is intended for the client. The client has full rights to sue the business or professional for their losses.

An example of negligence in the working environment is when an architect provides flawed designs. As a result, the final product does not match the client’s expectations and what the architect promised. The client will sue for the costs of fixing the structure and compensation. Such cases result in the business facing financial loss and also reputation damage.

Professional Indemnity insurance (PI) is a perfect cover to protect the business and professionals involved in these situations. PI insurance will provide the company with the cover of the cost of the claim and defence. In addition, PI insurance understands mistakes do happen and helps professionals when they need it the most.

Misrepresentation Claims

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Misrepresentation can significantly impact a business and cause vital damage if clients feel it has affected their outcome or experience with the business. A business can misrepresent accidently, where the firm had reasonable foundations to believe their statement was true. The client can sue a company either way for not providing the service represented.

For example, a real estate agent sells a house with damages and electrical issues, but the agent tells his clients nothing is wrong with the house. The client will suffer financial loss after buying the home to pay for additional repairs. The client has the right to sue the professional for providing mispresenting information when signing a deal and making payments.

Professional Indemnity insurance (PI) in these cases will provide cover for defence and compensation costs. In addition, professional indemnity will help the business explain its side in court, which will help it show that the misrepresentation may have been accidental. Solving the issue quickly with PI insurance will help the business avoid reputation damage and more significant financial loss.

Inaccurate Advice Claims

insurance liability Asia, professional indemnityTo succeed in the service industry, employees need to provide the best and most accurate advice to benefit clients and customers.

However, there are times when a business may provide inaccurate advice that will harm the clients. Inaccurate advice is mainly accidentally done by an employee and can affect the company. Incorrect advice can cause a client financial loss, physical harm and more.

Doctors are often victims of inaccurate advice claims, as doctors can provide incorrect advice that can leave the client feeling frustrated, let down, and suffering financial loss. For example, in Hong Kong, a father of a disabled child is suing a doctor for HK$500 million for alleged inaccurate medical advice. It was proven the doctor’s advice was the reason the baby was born disabled. The father had full rights to sue the doctor for inaccurate diagnoses and any illness resulting from their advice.

Similar to the above claims, professional indemnity insurance (PI) will cover the claims’ cost and help the business provide compensation fees to the client. Therefore, professional indemnity insurance will help a business save a large sum of money and solve the claims as soon as possible to avoid reputation damage.

PI insurance companies understand mistakes happen no matter how careful a professional is. Although it is essential to realise that PI will only cover costs if the injury to the client is due to professional advice.

Intellectual Property Claims

Intellectual property, Copyright Claims HK, indemnity 中文

Sometimes, businesses believe their work and ideas are original, but this may not be. A professional will assume there is nothing wrong with using another company’s idea or picture from Google Images. However, using unoriginal work breaks the law, as the company or professional does not own rights to a property. When caught by the work owner, it can result in a lawsuit and intellectual property claims.

The company and professional may not know they have stolen work or broken intellectual property laws. Types of claims include copyrights, trademarks, patents or trade secrets.

A famous fascinating example comes from the movie Hangover 2; we all remember that Mike Tyson tattoo that the Hangover character woke up with on his face. Interestingly, Tyson’s tattoo artist, S.Victor Whitmill, filed a lawsuit against Warner Bros. Since he registered a copyright for the artwork. He claimed that using his design in the movie and advertisements without his consent was copyright infringement.

Professional indemnity insurance will protect the company against intellectual property claims. By proving the cost of compensation, defence cost, and also assisting if there was reputation damage. Thus, Professional Indemnity insurance can save the company and professional a large sum of money and repair any damage.

Do I Need Professional Indemnity Insurance?

As you can tell, professional indemnity insurance (PI) is a policy that can save a professional and a business from various claims and unfortunate situations. There are several benefits of PI insurance for professionals and companies.

If you provide any client or customer advice, you likely need the insurance. Working for yourself gives you freedom but also increases risks. As mentioned, we all make mistakes, and it is harder to fight against claims as one person. Therefore, professional indemnity insurance is crucial to individuals like freelancers, tutors, private consultants, life coaches, etc.

Even if your employee is the one who is at fault for the claim, you may still have to defend the company and them.

Your business and employees need professional indemnity insurance and avoid the claims before it is too late.


To Learn More about professional indemnity insurance and get the best protection for professionals, contact Red Asia Insurance.