Page 51 - The Insurance Times August 2025

Consumers

Dos and Don'ts for taking a Professional

Indemnity Insurance Policy in India

Dos 9. Buy from Reputed Insurers/Brokers
Choose insurers with strong claims-handling record
1. Assess Your Risk Exposure Accurately and understanding of your industry.
Evaluate the nature of services provided, potential
liabilities, and legal exposure. Don'ts
Consider previous claims or complaints that could
1. Don’t Underinsure to Save Premium
indicate your risk level.
A lower premium now could mean large out-of-
2. Choose the Right Sum Insured (Limit of Indemnity) pocket losses later.
Opt for a limit that covers the worst-case scenario
2. Don’t Delay Reporting Incidents
based on your industry norms.
Notify the insurer immediately of any circumstance
Ensure it includes both defense costs and compen-
that may give rise to a claim — even if no demand
sation payouts.
is made yet.
3. Understand the Policy Wording Thoroughly
3. Don’t Assume All Legal Costs Are Covered
Read clauses on retroactive date, exclusions, con-
Check if legal defense is within the sum insured or
ditions precedent, and territorial/jurisdictional lim-
its carefully. in addition to it.
4. Disclose All Material Facts Honestly 4. Don’t Overlook Territorial and Jurisdictional Limits
Provide a full history of prior claims, ongoing litiga- Ensure coverage aligns with your client base – es-
tion, or regulatory actions. pecially if you serve foreign clients.
5. Check for Retroactive Coverage 5. Don’t Omit Sub-Consultants in Your Cover
Ensure the policy includes a retroactive date to If you outsource work, ensure your policy either
cover prior acts, especially if you are switching in- covers them or that they carry their own indem-
surers. nity cover.
6. Opt for a Policy with Extended Reporting Period (ERP) 6. Don’t Forget to Renew the Policy on Time
Useful if you plan to retire, close business, or switch Any lapse could break the continuous coverage
professions — it allows you to report claims after
chain and void retroactive coverage.
policy expiry.
7. Don’t Ignore Policy Exclusions
7. Keep Documentation and Contracts in Order
Be aware of exclusions like fraud, intentional acts,
Maintain proper records of client agreements, bodily injury (unless covered), contractual liability,
deliverables, communications, etc., to support your
defense if needed. etc.
8. Don’t Misrepresent Information in Proposal Form
8. Update the Policy Annually
Update turnover, staff count, and scope of services Misrepresentation can lead to claim denial or policy
each year to maintain appropriate coverage. cancellation.

46 August 2025 The Insurance Times