Business Indemnity Insurance

Business indemnity insurance policy protects business owners and employees when they are found to be at fault for a specific event such as misjudgment. Typical examples ofindemnity insurance include professional insurance policies such as malpractice insurance, and errors and omissions insurance. A business indemnity insurance plan pays up to a fixed amount when you make a claim. The premiums on health insurance indemnity plans may be lower than on other plans, but the fixed payments may cover only a fraction of your medical bills.

What Is Indemnity Insurance?

Indemnity insurance is a type of traditional insurance in which a fee is paid to an insurance company.

A business indemnity insurance is a sum paid by A to B by way of compensation for a particular loss suffered by B. The indemnitor (A) may or may not be responsible for the loss suffered by the indemnitee (B). There are different types of indemnity insurancewhich includes personal indemnity, professional indemnity and health insurance.Indemnity insurance functions as a source of financial support in the event that a policy holder is sued for damages.

Let us now look at the various types of indemnity insurance policy.

1. Personal Indemnity Insurance

Personal indemnity insurance is a type of insurance that is offered as a homeowners or renters insurance policy.

The insurance company offers a policy in which it will indemnify a policy holder for any losses covered by the policy. Individuals that pay a landlord to live on a property can be sued if they cause any type of damage.

This is also true for landlords that fail to repair or correct a previously identified problem with the property. In either case, an individual or a landlord would need to pay for damages suffered by the other party.

2. Professional Indemnity Insurance

Professional indemnity insurance is a type of professional liability insurance policy.

The insurance policy offers protection to a policy holder for actions that cause harm to a client. This can include mistakes or oversights that can occur while performing a service.

One type of coverage that most professional services typically add to an insurance policy is called errors and omissions coverage. The insurance will typically pay for legal costs of the policy holder in the event of getting sued by a client.

Below is the list of some of the danger areas your business could be exposed to:

  • Dishonesty: liability arising from the theft of your clients’ money
  • Intellectual property: unintentionally infringing on others’ copyrights, trademarks, broadcasting rights, any act of passing off.
  • Loss of documents/data: damaged, lost or stolen data and documents belonging to your clients
  • Negligence: or breach of duty of care

What you will be covered for

Professional Indemnity (PI) insurance protects your business against claims for loss or damage by a client or a third party if you have made mistakes or are found to have been negligent in some or all of the services that you provide for them. PI insurance will also cover legal costs.

Many professions are required to have PI insurance cover as a regulatory requirement or as a result of their professional authorization. This includes solicitors, accountants, architects, mortgage intermediaries, insurance brokers and financial advisers. Many consultants, advertising and PR agencies, and designers also choose to have this type of insurance.

If you plan to cancel your policy when you close your business or retire, you may need to arrange 'run-off' cover for a period of time afterwards.

Also, if you plan to change insurers, you will either need to arrange run-off cover or get agreement from your new insurer to accept new claims for prior incidents.

3. Health Indemnity Insurance

The most basic type of business indemnity insurance is a health insurance policy. A traditional health insurance policy can come in the form of an individual policy or a group policy.

These types of policies provide coverage for medical costs that are not specifically excluded in the policy. Exclusions can include a pre-existing condition or some other type of health issue that a health insurer does not want to include on the policy.

Coverage is usually dependent on the health of the insured at the time the policy is issued.

How much cover do I need?

All types of business indemnity insurance whether personal, profession or health insurance contain limits and fees on its policies. Fees can include a deductible as well as a co-insurance payment.

The deductible is an out-of-pocket expense that an insured party pays before the policy will cover any additional costs. A co-insurance payment is a percentage of costs that the policy holder needs to pay before the policy will cover the remaining costs.

These fees are designed to lower costs by having the insured party pay a small portion of the expense. The amount of coverage that is needed for an indemnity insurance policy depends on the type of policy that is being purchased. Many insurers will require a minimum amount of coverage for a professional indemnity policy.

A personal indemnity policy will need to have enough coverage to pay for any damage or injury that occurs. Coverage amounts can start from some few thousand dollar and can go as high as $1 million or more for coverage.

If you have any question or comment about business Indemnity Insurance feel free to reach us through the comment form below. 


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