Indemnity insurance

Indemnity insurance can help protect your business when someone claims you caused them harm due to a business disagreement, whether that claim is true or not. This type of insurance is also known as professional liability insurance or errors & omissions coverage.

What does indemnity insurance cover?

Indemnity insurance covers a range of professional disagreements. For instance, if a client accuses you of negligence, making an error or missing a deadline that causes them to lose money, they may seek damages.

In fact, while the word “indemnity” sounds scary, it’s just a fancy word that means compensation from loss or damage. So indemnity insurance is when your insurer helps pay another party after a loss has occurred — or “indemnification.”

No matter how false that claim might be, without indemnity insurance, you’ll be paying the upfront expenses to defend yourself entirely out-of-pocket.

One form of indemnity insurance most of us have heard of is malpractice insurance. This coverage is common among doctors, surgeons and other healthcare professionals because it helps to protect them from claims that their treatment resulted in physical or mental harm to patients.

The thing you need to remember is this: Accusations against you don’t have to be true for you to need to defend yourself.

Indemnity insurance helps cover court costs and fees regardless of the outcome, and can help cover settlements should you be found at fault — up to your policy limit.

Indemnity insurance vs. public liability insurance

We’ve seen how indemnity coverage can protect your business against claims related to your work, but what about other on-the-job accidents?

Say you’re a plumber hired to fix a leaky pipe. You do a great job, but just as you’re turning to leave, you knock over an expensive vase, and it shatters on the floor.

This accident wasn’t related to the work you were doing, so indemnity insurance wouldn’t cover the damages. That’s where public liability insurance comes in.

Public liability insurance, also known as general liability insurance, can help cover you for risks such as a customer injury or damages to someone’s property. Just like indemnity insurance, it can help pay for court and legal fees.

It may seem like splitting hairs; after all, an on-the-job accident is an on-the-job accident. But insurance companies separate these policies to ensure you get the necessary policies for your business needs without paying for those you don’t.

While indemnity and public liability insurance plans cover a broad spectrum of risk, other common types of small business insurance exist.  They include commercial property insurance, workers’ comp and tools and equipment insurance.

Who needs indemnity insurance?

Since every small business is different, not everyone needs indemnity insurance. However, business owners within these industries often consider indemnity insurance to protect themselves from financial losses due to a client disagreement:

• Contractors such as general contractors, landscapers, plumbers, HVAC technicians, painters, appliance technicians, fence installers and lawn care professionals
• Construction professionals such as handymen, general contractors, carpenters, electricians, drywall installers, roofers, flooring professionals, masons, paving installers, concrete contractors, snow plow operators and glaziers
• Consultants of all kinds
• Fitness professionals such as personal trainers, yoga instructors, golf instructors, dance teachers, CrossFit instructors, fitness instructors, Zumba instructors, Pilates instructors, umpires, indoor cycling instructors and aerobics instructors
• Beauty professionals such as barbers, hair stylists, estheticians, nail technicians, cosmetologists and beauticians
• Therapists such as massage therapists
• Entertainment professionals such as event planners, photographers and DJs
• Educators such as daycare and childcare professionals and tutors

Accidents happen, but that doesn’t mean they should derail your business. If someone ever accuses you of not doing your job correctly, indemnity insurance will keep you and your business covered.

NEXT makes insurance easy

NEXT makes it simple and fast to get the business insurance coverage you need.

You can start a quote, customize your options and access your certificate of insurance online immediately after you purchase — in about 10 minutes.

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