Professional indemnity insurance covers the effects of a professional’s application of his skill. Depending upon the complexity of the issue, legal fees alone can reach astronomical proportions. Between depositions, fact-finding interviews, and expert testimony on behalf of the professional, legal costs add up even before the case goes to trial. This insurance covers the professional’s legal fees up to and including trial costs. Should the case reach settlement, either before or after trial, this insurance will pay the resulting claim.
Prudent business professionals understand the importance of maintaining their coverage. Professional indemnity insurance does not cover claims that occur after the policy lapses. Experts advise that a business professional maintain his coverage well into his retirement. Often, a client is not aware of the damage he has suffered until several years after receiving professional service. The resulting lawsuit may thus occur after a business professional has retired; and if the coverage is not maintained, a business professional may find himself facing an expensive lawsuit instead of quiet days spent fishing.