PI Insurance provides protection for losses incurred due to mistakes that are made on the part of the businessman or company (the insured). Terms like Professional liability insurance and errors and omissions insurance are often used as substitutes for professional indemnity insurance. But errors and omissions insurance is a small part of a much bigger policy which is the professional indemnity insurance. The differences are as follows:
1) In the framework of the insurance policy, professional indemnity insurance is the umbrella that covers all the risk factors under its policy. Several types of insurance fall under this framework. Errors and omissions is one such aspect covered under the framework.
2) Mistakes made by the employees (errors) and processes or work neglected (omissions) are under errors and omissions. Situations involving discrimination or sexual harassment are covered by Professional indemnity insurance . The company can tailor the policy as per their requirement which better suits their needs. Specific clauses can be added. These can be enjoyed if the policy is taken through trade associations or other professional groups.
3) Decades ago, when old guidelines governed the insurance policies, professional occupations like lawyers and doctors were insured under the professional indemnity, whereas the semi-professional occupations were covered by errors and omissions.
4) Professional indemnity insurance in Singapore deals with losses incurred by intellectual damages.
Jobs dealing with giving recommendations, advice, generating products to the customers, will require coverage under such insurance policies. In the case of errors and omissions, these are losses incurred due to physical damages.
5) Professional indemnity insurance is most suited for maintenance, construction, engineering services, accounting, transport and financial services. Some non-profit organizations and NGOs also opt for this policy. Errors and omissions cater to the needs of insurance agents, lawyers, brokers, quality control specialists, architects, and consultants. But there is no compulsion in taking only the policy that is generally used in your field.
Professional indemnity and errors and omissions are insurance that protects you from the negative results of your personal mistakes during your career. The legal expensive required in the process of settlement can be huge, bringing the company to ruins. These expenses are covered by the policy. Both policies go hand in hand and many companies prefer taking both policies for better coverage of insurance. Minor loopholes in an individual insurance policy are a possibility. The presence of both policies eradicates loopholes completely, serving the purpose of purchasing such policies in the first place.