3 reasons why your business needs Professional Indemnity Insurance
9 minute read
A well-crafted business plan, great products, and even the necessary funds are no guarantee for a company’s success. Nowadays, businesses also have to pay close attention to security.
Unfortunately, cyber threats grew in recent years both in scale and complexity. More than 800 websites were defaced, and there were more than 47,000 Singapore-hosted phishing URLs detected in 2019 alone.
So, what can you do to keep your business operations safe and secure?
One step is to implement anti-virus and cybersecurity measures, but you can also get a professional indemnity insurance policy.
Let’s take a better look at this type of insurance and why it’s important.
- What is Professional Indemnity Insurance in Singapore?
- What is covered by professional indemnity insurance?
- Who requires Professional Indemnity Insurance?
- Do you need professional indemnity insurance?
- How much does Professional Indemnity Insurance cost in Singapore?
- What does Professional Indemnity Insurance protect Singapore businesses against?
- Why is Professional Indemnity Insurance important?
What is Professional Indemnity Insurance in Singapore?
Professional indemnity insurance (PI) is a commercial insurance policy crafted with the aim of protecting business owners, freelancers, and self-employed individuals if they face claims of inadequate service.
An organization providing professional services or advisory services can be sued if the client feels dissatisfied with their work. A client has the right to deem the service unsatisfactory (negligence, bad quality, or even missed deadlines that cost them money) and make a claim.
Similarly to professional liability insurance, professional indemnity insurance in Singapore is there to safeguard service-based companies if a wrongful act occurs.
It doesn’t matter how good your services are, there are always disagreements in the world of business. But this time, you will have this policy to cover the cost of putting things right (including legal costs and fees).
What is covered by professional indemnity insurance?
This insurance covers a broad range of potential risks your business can run into:
- Negligent acts, errors, omissions, or misstatement
- Real or alleged breach of professional duty
- Dishonesty of employees
- Defence costs
- Court attendance costs
- Public relations costs
- Claims investigation costs
- Breach of confidentiality
- Defamation or libel
- Intellectual property rights infringements
- Loss of documents or data
Who requires Professional Indemnity Insurance?
No one can penalize you for not being insured. However, if you end up in legal troubles, PI insurance will save the day.
Here is a list of businesses that should definitely consider investing in a good insurance policy:
- Engineers and other construction-related professionals
- Property managers, real estate agents and agencies
- Employment agencies
- IT/Technology consultants
- Website developers and digital marketers
- Multimedia companies;
- Doctors, surgeons, TCMs, and other medical providers
- Accountants/ auditors
- Designers (web designers, graphic designers, and interior designers)
- Beauticians and plastic surgeons
- Marketing experts
- Teachers and tutors
- Physical sports instructors (MMA, Yoga, dancing, etc.)
Do you need professional indemnity insurance?
Humans are bound to make errors. However, a mistake can lead to financial losses, heavy legal endeavors, and reputation tarnishing.
Fortunately, professional indemnity insurance can protect your business as well as your employees against an allegation of negligence, error, or omission from a third party when rendering your services.
Your company may need this insurance if:
- It uses intellectual property that belongs to others.
- You belong to a professional body where professional indemnity insurance is compulsory and an industry-specific legal requirement.
- A client requires your business to be insured for professional indemnity before awarding you a contract.
- It provides advice/ professional service to clients.
- It handles confidential information.
How much does Professional Indemnity Insurance cost in Singapore?
Professional indemnity insurance cover is sold in variable amounts and limits. However, if your company belongs to a niche where this kind of insurance is legally required, there will be a minimum amount of cover prescribed.
For instance, in Singapore, the law society requires every lawyer to be covered for at least S$1m for each and every claim for lawyers practicing in sole-proprietorships and partnerships and S$2m for lawyers practicing in limited liability law corporations (LLCs) and limited liability law partnerships (LLPs).
It is also wise to check if contracts signed with your clients specify a level of professional indemnity insurance required or if your client expects a certain level of coverage from the suppliers.
What does Professional Indemnity Insurance protect Singapore businesses against?
Singaporean businesses that provide professional advice or services rely on insurance for protection. Should a client make a claim (in the case of an injury or financial loss), PI covers the cost of your attorney’s services and damages that have to be paid.
Therefore, you need this kind of insurance if your business gives advice or provides professional services so that you can prevent a mistake from costing your business a lot of money.
Businesses dealing in accounting, bookkeeping, the IT industry, advertising, and management can really benefit from this kind of insurance.
It is important to get insured since the legal costs to defend your business can really add up. PI is there to cover your business and also take care of unexpected costs such as damages, claims, investigations, PR consultants, and other expenses incurred.
Why is Professional Indemnity Insurance important?
Never forget how hard you have worked to get your business off the ground and start making money.
Here are the most significant reasons why you need insurance as your shield against unexpected problems that can cause financial losses:
- Protection against claims of malpractice, negligence, and professional misconduct
- Protection against 3rd party injury and property damage
- Protection against any attempted harm toward your business’s reputation
It would be very unwise to risk harming your business and its reputation just because you didn’t take the time to get a good professional indemnity policy.
It is obvious that humans can make errors, but that doesn’t mean that your business should perish if some of your employees make a mistake every once in a while.
If you’re ready to search for reliable insurance, take some time and evaluate Sleek’s comprehensive insurance plans that will protect your business when you need them the most.
To assess and find out how else you can strengthen your cyber security, download our free insurance checklist here!
And if you have any uncertainties, feel free to reach out to Sleek and ask a question.
Well it’s simple! If you have any questions about getting your business started, get them all answered by having a free consultation call with our experts.