An indemnity is a comprehensive form of insurance compensation for damages or loss. When the term indemnity is used in the legal sense, it may also refer to an exemption from liability for damages.
Indemnity is a contractual agreement between two parties. In this arrangement, one party agrees to pay for potential losses or damages caused by another party. A typical example is an insurance contract, in which the insurer or the Indemnitor agrees to compensate the other (the insured or the indemnitee) for any damages or losses in return for premiums paid by the insured to the insurer. With indemnity, the insurer indemnifies the policyholder—that is, promises to make whole the individual or business for any covered loss.
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Do I need professional indemnity insurance?
Many professions need to have professional indemnity insurance as part of their respective industry body’s regulatory requirements. Even if you are not obliged to have PI insurance, without it, you could be liable for thousands of pounds worth of legal fees and compensation payments – not to mention lost income from the time spent defending any allegation. You are likely to need professional indemnity insurance if:
- You provide advice or professional services to your clients (including consulting or contracting)
- You provide designs to your clients (such as working as an architect or design engineer)
- You want to protect against allegations of mistakes or negligence in work you have undertaken for your client
- You work as a contractor, consultant, freelancer or self-employed professional, and your client has requested you arrange professional indemnity insurance in order to undertake a contract
- Your industry association/regulatory body requires you to have it
Professions that might need professional indemnity insurance include (but are not limited to):
- Management and business consultants such as marketing consultants, training consultants and education consultants
- IT professionals including IT contractors, consultants, programmers and developers
- Technical and engineers contractors including CAD designers, project engineers and offshore oil and gas engineers
- Recruitment agencies and recruitment consultants
- Designers such as web designers, graphic designers and interior designers
- Fitness professionals including personal trainers, dance teachers and yoga instructors
Teachers and tutors including private tutors
Other common reasons for indemnity insurance:
- Chancel repairs. Where a property is near a church the owner could be liable for costs if the church needs repairs. Indemnity insurance would cover those costs.
- Absence of easement. This is where you have to cross someone else’s land to reach your property. If the ‘right of easement’ (permission to travel over that land) hasn’t been granted, indemnity insurance protects you from loss of value.
- Insolvency. If someone has given you money to help with your deposit, you could need indemnity insurance. Because, if that person is ever declared bankrupt, their creditors could make a claim on your property. The insurance could protect you from the lost value if this occurred.
Who do I speak to about indemnity insurance?
Speak to your conveyancer/solicitor. They can advise on whether this type of policy can offer you the protection you need in order to proceed with your house move.
Often it will be your conveyancing solicitor contacting you about an issue which has either come to light as a result of the building survey or because the seller has been unable to provide certain paperwork or certificates.
Who is covered by indemnity insurance?
An indemnity policy covers the person or people buying the property and their successors. If you are taking out a mortgage on the property, it also covers your lender.
