Error and Omission/Professional Indemnity Insurance
Error and Omission also known as Professional Indemnity Insurance is an ideal cover for individuals or companies engaged in the work of professional services. Error and Omission policy provides cover against any legal-suite filed against them by a third-party for negligence or error or omission on the part of the person in delivering professional service. Policy covers the cost of defence, cost of investigation, amount payable as per judgements or arbitration rewards, etc.
Only civil negligence or errors are covered under the policy. Any criminal act or act against the local law will not be covered under the policy.
A person (individual or company) engaged in the field of professional service must take this policy in order to safeguard their interests. Some of those individuals or companies who must take this cover are
- IT/ITES companies
- Call Centre/ BPO
- Media Houses
- Law Firms
- Doctors/Lawyers
- Companies bound by the Contracts to have such policy
Error and Omission/ Professional Indemnity policy covers the following risks for insured or another person for whose act insured is legally liable during the policy period after the retroactive date of the policy.
- Negligence
- Error or Omission
- Wrongful Act
Error and Omission/ Professional Indemnity policy indemnifies the insured for costs involved in legal liabilities arising out of alleged or actual negligence/error/omission of one’s professional services during the period of insurance.
- Defence Cost
- Judicial Rewards
In order to file a claim in Error and Omission/Professional Indemnity policy the insured has to be in receipt of a legal notice from the claimant.
The Insured needs to inform the insurance company about the legal notice received by it within the stipulated period post which insurance company will start claim management process.
For a claim to be valid it should meet following conditions on account of Negligence/ Error/Omission on the part of insured. It can only be proven if it has
- Existence of duty of care
- Breach of this duty
- Injury suffered by a person or property damaged due to this breach
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