Cover Your Mistakes

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Cover Your Mistakes
Nirmala Konjengbam - 28 October 2020

Professional indemnity insurance protects owners and their employees against legal monetary claims for error, omissions, and professional negligence

To err is human. Even if committed inadvertently, its after-effect is magnified manifold if it involves losses to others, especially clients'. Make no mistake, it can turn costly sooner than one can anticipate if errors lead to litigations. It is likely to drain one emotionally and financially as well. No matter how diligent or efficient business owners, consultants, or professionals are, they always run the risk of committing inadvertent mistakes. Affected clients are at liberty to file litigations. While court cases may result in sizeable financial outgo either in paying lawyers or in compensating affected clients.

Professional indemnity insurance protects owners and their employees against legal monetary claims for error, omissions, and professional negligence. It pays for the losses if omissions or errors occur during the policy period. Some insurers cover a retroactive date when claims can be filed for an incident in the past after liability insurance comes into force.

Liability insurance covers legal expenses arising out of incidents of errors or omissions that would otherwise have to be borne by a company or professional.

Who should buy the cover?

In many cases, contractual obligations from the client-side require a professional or a company to buy liability covers even before a project is commissioned. Even if clients do not ask, it is prudent to have such a policy cover unintentional mistakes.

A wide range of professionals and service providers can purchase professional indemnity insurance, including chartered accountants, doctors, engineers, architects, management consultants, lawyers, real estate brokers, insurance agents, family counselors, and medical establishments.


Policy premiums vary with a purchaser's profile. A clean legal record with vast experience can earn discounts for a professional.


  • There are certain exclusions under liability insurance
  • Any condition caused by or associated with AIDS
  • Services provided while under the influence of intoxicants or narcotics
  • Any act committed in violation of any law or ordinance
  • Any third party public liability
  • Legal liabilities arise from all personal injuries like libel, slander, false arrest, wrongful eviction, wrongful detention, and defamation
  • Infringement of copyright, patent, trade name, trademark, registered design
  • Legal liabilities due to deliberate, willful, or intentional non-compliance of any statutory provision
  • Financial loss such as loss of goodwill or loss of market
  • Legal liabilities arising due to any dishonest, fraudulent criminal or malicious act or omission

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