Professional Indemnity

Muhtasari

Some workers are paid not for what they make with their hands but for what they know. A doctor, an accountant, an architect and an insurance broker all sell judgement, and a client acts on that judgement without checking it. When the judgement is wrong, the client can lose money, sometimes a great deal of it, without a single thing being broken or anyone being hurt. Professional indemnity is the insurance that answers for that kind of loss.

In this lesson you will learn exactly what professional indemnity covers, the negligence that triggers it, and the long list of professions that must carry it, several of them by Nigerian law. You will see why expert advice exposes a professional to strangers who were never their client, why these policies respond to the year the claim is made rather than the year the mistake happened, and how to tell professional indemnity apart from public liability, the distinction examiners test most.

Malengo

  1. Define professional indemnity insurance and explain the negligence it covers
  2. Identify the professions that require professional indemnity cover
  3. Explain why professional advice creates a financial exposure to third parties
  4. Distinguish professional indemnity from public liability insurance

Maelezo ya Somo

A young accountant in Ikeja prepares a company's tax returns and, through a careless slip, understates what the company owes. Two years later the Federal Inland Revenue Service reassesses the company and hands it a bill for the shortfall plus a penalty running into millions of naira. Nothing was stolen, nothing caught fire, no one was injured. Yet the company has suffered a real financial loss, and it blames the accountant. Can the accountant, who may not own assets worth a fraction of that bill, meet the claim? Only if the right policy stands behind the professional judgement that failed. That policy is professional indemnity.

Tathmini ya Somo

Hongera kwa kukamilisha somo la Professional Indemnity. Sasa kwa kuwa umechunguza dhana na mawazo muhimu, ni wakati wa kuweka ujuzi wako kwa mtihani. Sehemu hii inatoa mazoezi mbalimbali maswali yaliyoundwa ili kuimarisha uelewaji wako na kukusaidia kupima ufahamu wako wa nyenzo.

Utakutana na mchanganyiko wa aina mbalimbali za maswali, ikiwemo maswali ya kuchagua jibu sahihi, maswali ya majibu mafupi, na maswali ya insha. Kila swali limebuniwa kwa umakini ili kupima vipengele tofauti vya maarifa yako na ujuzi wa kufikiri kwa makini.

Tumia sehemu hii ya tathmini kama fursa ya kuimarisha uelewa wako wa mada na kubaini maeneo yoyote ambapo unaweza kuhitaji kusoma zaidi. Usikatishwe tamaa na changamoto zozote utakazokutana nazo; badala yake, zitazame kama fursa za kukua na kuboresha.

  1. Professional indemnity insurance protects a professional against: A. Damage to the professional's own office and equipment B. Legal liability for financial loss caused to others by negligent work C. Injury to the professional while at work D. Theft of the professional's fees by a client Answer: B
  2. Which of the following is NOT normally covered by professional indemnity insurance? A. An accountant's negligent tax advice B. An architect's defective design C. A visitor injured by a falling signboard on the premises D. A surveyor's negligent valuation Answer: C
  3. A professional indemnity policy has a limit of indemnity of 15,000,000 naira and an excess of 400,000 naira. A valid claim for a proven loss of 5,400,000 naira is made. How much will the insurer pay? A. 5,400,000 naira B. 5,000,000 naira C. 4,600,000 naira D. 15,000,000 naira Answer: B
  4. In Nigeria, a licensed insurance broker is statutorily required to keep professional indemnity cover of at least: A. 1,000,000 naira B. 5,000,000 naira C. 10,000,000 naira D. 20,000,000 naira Answer: C
  5. Under a claims-made professional indemnity policy, the policy that responds to a loss is the one in force when the: A. Negligent act was committed B. Premium was first paid C. Claim is first made against the insured D. Policy was cancelled Answer: C

Vitabu Vinavyopendekezwa

Principles of Risk Management and Insurance
Principles of Risk Management and Insurance
Manukuu: Thirteenth edition
Mchapishaji: Pearson
Mwaka: 2016
ISBN: 978-0-13-408257-8
Maelezo: The standard introduction to risk and insurance, covering risk management, insurer operations and the main lines of life, health, property and liability cover.
Fundamentals of Risk and Insurance
Fundamentals of Risk and Insurance
Manukuu: Tenth edition
Mchapishaji: Wiley
Mwaka: 2008
ISBN: 978-0-470-08753-4
Maelezo: A clear account of the nature of risk and the economics of insurance, written for beginning students across life, health, property and liability insurance.
Fundamentals of Insurance
Fundamentals of Insurance
Manukuu: Second edition
Mchapishaji: Himalaya Publishing House
Mwaka: 2017
ISBN: 978-93-5097-079-9
Maelezo: An accessible treatment of insurance in four parts: the basics of risk, insurance management, life insurance and non-life insurance.

Maswali ya Zamani

Unajiuliza maswali ya zamani kuhusu mada hii yanaonekanaje? Hapa kuna idadi ya maswali kuhusu Professional Indemnity kutoka miaka iliyopita.

WAEC SSCE - Insurance - 2018

Swali 1 Ripoti

(a) List six experts that would require professional indemnity insurance in their operations.

(b) Explain the cover provided by each of the following insurance 'policies:
(i) personal liability
(ii) public liability
(ii) professional indemnity 
 

Tazama Jibu