Indemnity insurance is a form of insurance that is made to protect the financial interests of business owners, entrepreneurs, and professionals if they are found to be liable for a particular act or event such as fraud, misrepresentation or misjudgment.
Insurance is a contract of indemnity to indemnify or compensate one party, known as the insured, for the loss or damage caused to him or his property. The party compensating the insured for his loss is called the insurer who is usually an insurance company. Compensation is payable for loss or damage suffered by the insured in return for a quarterly, monthly or annual premium payable by the insured party to the insurer.
Some examples of indemnity insurance are malpractice insurance policies that protect professionals against liabilities they might incur for indulging in malpractice in their jobs. Omissions insurance policies protect professionals against liabilities incurred for acts of omission or non-omission in their professional duties.
Indemnity insurance is also known as professional liability or indemnity insurance. It is provided exclusively to professionals and service providers who render expertise advice or services, mostly in the field of legal and financial services such as accountants, lawyers, financial advisors, attorneys and insurance agents. Indemnity insurance will provide these professionals protection against liabilities or claims made by clients or other parties for any possible negligence or omission to perform certain acts that resulted in a possible financial loss or legal problems for their clients.
The benefits of having indemnity insurance
These kinds of professionals have high-pressure jobs and are dealing with hundreds of clients every day. Lawyers, financial experts and advisors, mortgage brokers, insurance agents, attorneys and professionals engaged in rendering similar kinds of services must not only protect their clients but also themselves. Here are a few reasons why they must secure themselves with indemnity insurance or professional liability/indemnity insurance:
- Indemnity insurance will protect professionals against unintentional loss that they might cause to their clients or third parties while dispensing their services, such as misjudgment or omission or negligence.
- It can protect professionals like tax accountants who try to reduce the tax liability of their clients by resorting to tax avoidance methods, which are not illegal but could still have them questioned by the income tax authorities.
- Indemnity insurance can protect the interests of professionals and prevent them from getting barred from rendering their professional services. For example, it can help prevent a lawyer from losing his certificate of practice and registered number while rendering professional services.
Allegiance is a company in Singapore that specializes in rendering professional indemnity insurance services in Singapore.