Professional Indemnity Insurance is an insurance cover that protects professional service providers against financial claims from their clients and other third party claims arising from any of the following reasons:

  • Unintentional Breach of Professional Duty
  • Professional Negligence
  • Errors and Omissions
  • Poor Advice 
  • Libel and Slander
  • Infringement of Intellectual Property Rights
  • Loss of Documents
  • Unintentional Breach of Contract

Professional Indemnity Insurance would pay out the financial damages awarded by a court of law and will also pay for related legal defence costs up to the limit specified in the policy. The cover is offered on an annually renewable basis but can also be offered for a specific project.

Risks of Operating Without Professional Indemnity Insurance

Mistakes will happen. Operating your business without having it protected with Professional Indemnity Insurance leaves it vulnerable to claims from third parties and liabilities arising out of negligent errors or omissions.

  1. Legal Risks

If you work in a professional sector, then professional indemnity insurance can protect you against civil liabilities which include breach of duties, tort, and contract. Your insurance policy can be arranged to cover as many civil liability areas as necessary.

  • Tort Liabilities
      • If you do not have a contract with your client, but they have a legal case to make, then they may make it under tort law.
      • The UAE Federal Law No 5 of 1985 requires professionals to exercise care in the execution of their duties and holds them liable for gross negligence and fraud. If the conduct is beyond what a reasonable person in a similar line of work would exercise, it can be argued that it constitutes gross negligence.
      • Further, the DIFC laws on tortious liability requires the following elements to establish negligence:

    – The party at fault owed a duty of care to the party who suffered a loss
    – The party at fault breached the duty of care owed; and
    – Damage arose as a result of the breach of duty (causation)

  • Breach of Statutory Obligation
    • Professional indemnity insurance is required for certain industries to renew or maintain trade license like Lawyers, VAT Consultants, Auditors.
  • Breach of Duties
    • Professional indemnity insurance can also cover you for breach of statutory duty, breach of intellectual property or breach of fiduciary duty. 
    • If you belong to Industries such as accountancy, real estate, architecture, construction etc., cover for breach of statutory duty becomes essential.
    • Breach of intellectual property rights can include copyright, trademark, patent, plagiarism and media rights. Finally, fiduciary duty is a legal relationship of confidence and trust between your business and your clients. Breach of fiduciary duty is usually when your client believes you are not acting in their best interests.

These are the core elements of most professional indemnity insurance policies, but it is possible to look at add-ons too. Add-ons may include cover for the loss of documents, fidelity, and libel/slander.

2. Financial Risks

Operating without professional indemnity insurance leaves your business open to huge financial risk that comes from third party claims and liabilities. The costs of a claim can quickly reach hundreds of thousands and even millions. 

Most insurers offer policies which provide cover from an indemnity limit of AED 500,000 to AED 10,000,000. It is also not uncommon for your clients to require you carry much higher limits like USD 50,000,000.

We understand that these numbers and terms can be tedious to understand as your primary focus is to run your business. So, leave the business insurance matters to the experts at We will assign you a dedicated personal advisor who will help you understand everything you need to know about keeping your business safe from liabilities arising out of negligent errors or omissions. Download our free eBook – The Ultimate Guide to Professional Indemnity Insurance and take an important step towards keeping your business safe.

About Author

Rachel Al Mughairi

About Author

With over 34 years in the international insurance industry in a variety of senior management roles, and as holder of the Diploma in Insurance from the Chartered Insurance Institute, Rachel surely knows her insurance! With experience in London, continental Europe and the Middle East, Rachel is here to share her knowledge and help you understand more about insurance products in this easy-to-understand series of videos and blogs.