What is Indemnity Insurance and Do I Need It?
The first question that you may utter is – what is indemnity insurance ?
Well, indemnity insurance is about protection brought by negligence. In businesses, your negligence can be considered as a mistake that you have committed though you did it unintentionally or subconsciously.
If you have a client who believes that you have done something wrong such as giving a bad advice, not delivering what you promise to deliver or being careless with their information which is confidential, they have the freedom to sue you for any loss they have incurred because of the failure.
When the client have decided to sue you, that is the time that indemnity insurance will kick in. Legal costs incurred in defending you and the damages awarded to the client will be paid up to the amount covered by the policy. You will be able to resolve the problem and if you are fortunate enough, you can keep the client.
The indemnity insurance serves as a protection in losing your profits and even assets. It also serves as a protection for your revenue so as to help in sustaining your business. It is unusual for the companies to experience financial difficulties or get into debt. There are companies who will be refusing to give payments to what they owe you when your company will be going into bankruptcy. indemnity insurance will cover the losses in such situations. Indemnity insurance can also be useful to entrepreneurs as well as employees if the company does not pay the health benefits as well as the social security benefits.
The price of indemnity insurance is affordable. The fact is that you will purchase the amount of coverage which corresponds to the amount of revenue you are getting from the sale of the service or product of your business. The price of this indemnity insurance is of low cost. You will get the benefit as well as advantage of the indemnity insurance even if you will just start your business or your business is just small.
But you should always remember that indemnity insurance is for genuine mistakes. Do not tend to draw the lines of paying claims which are caused by being reckless or stating a promise to deliver something you cannot. Remember that you have to always act responsibly. Although your company has its own terms and conditions, it is advised that you avail of indemnity insurance . Nowadays, customers are inclined to having the company sued first before asking questions.
The question now is – who needs to have indemnity insurance?
Well, it easier to answer the question– who does not need indemnity insurance ? A few years ago, indemnity insurance is only for those who were obliged to have indemnity insurance by those professionals like accountants, architects, solicitors and others.
indemnity insurance is a protection for your business. At least, you do not get to spend certain amount of money because of not being able to deliver what you promised to deliver or things like that. This indemnity insurance just reminds you to be responsible in every business transaction you enter into.