If you cause damage to another person, they are entitled to compensation. In private cases, this is covered by your private liability insurance. However, if this happens as part of your professional activity as a self-employed person or freelancer, this does not apply. This is why it is all the more important for you to take out professional liability insurance. We have summarized for you here when this makes sense for you and what advantages it offers you.
If you as an employee make mistakes in the course of your work, this can have serious consequences for a company. However, as an employee, you do not normally have to fear any consequences, as companies are covered by public liability insurance. However, the situation is different for freelancers and the self-employed: They assume the full risk themselves when carrying out their professional activities and are liable with their private assets in the event of an emergency. But this risk can be covered by taking out professional indemnity insurance.
Regardless of whether personal injury, property damage or financial loss occurs - you can insure any damage you cause in the course of your professional work with professional liability insurance. In practice, this can be, for example, payment of compensation to the opposing party or costs for damage repair, which are covered by the insurer.
Especially when it comes to serious personal injury, claims in the millions are not uncommon. If you are not covered by professional liability insurance, you will have to pay these costs out of your own pocket - in the worst case scenario, this could jeopardize your entire livelihood. We therefore recommend that you make provisions in good time and take out suitable professional liability insurance. For some industries, it is even mandatory to take out this policy.
As an employee, you do not need professional indemnity insurance: in this case, you are covered by your employer. However, if you run a business or are self-employed, you should take out such insurance. Although there are a few fields of activity in which you are highly unlikely to need professional liability insurance, there are also some particularly risky sectors.
For example, if you have a high level of responsibility or make far-reaching decisions with health or financial risks, it is advisable to consider taking out professional liability insurance. In some sectors, you have no other choice - this insurance is even mandatory for doctors.
It makes sense to take out professional indemnity insurance for the following professions in particular:
Based on this list, you can see that there are many different industries in which there is a high risk. While IT service providers or website operators, for example, can expect problems due to a failure to comply with legal requirements, the consequences for doctors or lawyers are much more serious: people's lives or very large sums of money are often at stake here.
For this reason, it is important that you choose professional liability insurance that suits your individual professional situation and provides you with sufficient cover.
These liability risks are decisive for professional liability insurance
If you are a service provider or work in an advisory capacity, you have a high level of responsibility. Depending on the industry you work in, mistakes can result in financial loss, property damage or personal injury, which can result in large sums of money.
For example, if you are a surgeon and you make a mistake during an operation, the patient can demand not only compensation for damages but also compensation for pain and suffering. If you are a management consultant and provide incorrect advice to a company, which results in it losing millions, you can be held liable. If you are proven to have made a mistake, you will bear the responsibility and therefore also the costs. Even supposedly minor oversights such as the infringement of image rights on websites can have expensive consequences.
In principle, professional indemnity insurance can protect you against the following liability risks:
Regardless of whether you work as a consultant or doctor - with professional indemnity insurance, you are comprehensively covered should someone ever demand financial compensation from you.
But even as a freelance journalist or IT consultant, you should think about taking out professional liability insurance. For just a small monthly amount, you can protect yourself in the event of an emergency and against potentially high financial claims.
The most important advantages and disadvantages of professional liability insurance
Taking out professional liability insurance should always be carefully considered. Although the premiums are comparatively low, you should ask yourself in advance whether such a policy provides you personally with sufficient cover. You should therefore be aware of the most important advantages and disadvantages of professional liability insurance.
Tip: Note the claim for performance in the contract. If, for example, as a service provider, you have received an order that you are supposed to fulfill through your professional activity and do not complete it, the claim for fulfillment is deemed not to have been fulfilled. A professional liability policy often does not cover the claim for performance and you will have to cover any resulting damage yourself. When taking out a contract for professional liability insurance, make sure that the claim for performance is also insured. Although this usually costs a small surcharge, it offers you more comprehensive protection.
You can fully claim the costs of professional liability insurance as special expenses in your tax return. If you work in a position with a high level of responsibility, it is highly recommended that you take out such a policy, as you can take out comprehensive cover for a comparatively low cost.
The most important difference between professional indemnity and public liability can be explained as follows:
This clearly shows why you don't need to take out your own professional indemnity insurance as an employee - but you shouldn't do without it as a self-employed person or freelancer. As an employee, you are covered by your employer, otherwise you should take out your own cover.
Tip: Additional cover is worthwhile in many cases. If you are employed, you do not normally need your own professional liability insurance - you are covered by your employer. However, if you would like more comprehensive cover, you can often add an optional module to your liability insurance that covers professional activities. The best way to find out about this is to contact the relevant insurance company directly.
Some professional groups are required to take out professional liability insurance. This requirement can either be stipulated by law or laid down in the respective professional regulations.
This obligation applies to the following professional groups, among others:
Please note: The name of this policy varies depending on the profession. Professional liability insurance can often be referred to differently. For example, lawyers are often referred to as lawyers' liability insurance, while pharmacists are often referred to as pharmacists' liability insurance.
Although these insurances are basically based on the same principle, the individual benefits and sums insured are often adapted to the individual requirements of the respective profession.
Which professional indemnity insurance is right for your personal professional situation depends above all on the industry you work in and whether you are employed, freelance or self-employed.
It is therefore all the more important that the insurance cover matches your individual requirements. If you need professional indemnity insurance as a lawyer, you will need a higher sum insured than, for example, a freelance journalist, as the amounts of damage in this sector are often significantly higher.
If you need advice on this, it can be helpful to contact an experienced insurance advisor who can help you find the right tariff.
The cost of professional indemnity insurance depends on various factors. Among other things, it depends on your professional group and your personal activities. The differences can vary from profession to profession.
For example, if you work as a service provider, the amount of your turnover plays a major role. If you are a doctor, on the other hand, you run a high risk of personal injury and pay correspondingly higher premiums.
As a rule, the insurer will therefore carry out a risk assessment before concluding the contract. This is necessary in order to be able to assess the risk of your professional activity more accurately.
This means that the higher your professional risk, the more expensive your monthly insurance premiums will be. The cheapest rates for professional indemnity insurance start at just a few euros per month. For very high-risk professions, however, the policy can cost more than 100 euros per month.
Our tip: Save on premium costs with a deductible. If you are prepared to agree a deductible in your policy, this will normally reduce your premium. This is because you will then be responsible for any damage caused up to the amount of the deductible - the insurer will cover all costs above this amount.
If you are a freelancer or self-employed person, you should not underestimate the consequences of a small mistake: It can quickly result in high costs that you have to pay out of your own pocket without suitable cover. As you are not covered by your employer's public liability insurance like an employee, you should take out suitable insurance yourself in this case.
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