Professional indemnity covers you for mistakes made during the conduct of your business. Small mistakes could potentially incur large losses as a result of an omission/ error/ misrepresentation of fact or material advice. Provision of wrong advice could cause financial loss to your client, and if your client were to pursue a legal suit to recover this loss, the financial impact of fighting a legal battle & its defence cost can bear down greatly on the financial standing of the defendant & its business.
Professional indemnity insurance significantly mitigates the potential financial loss incurred by the individual, should the legal liabilities assumed by undertaking the project/occupation far outweigh its benefit. It is prudent to be protected and be assured that the occupational risk can be covered under a Professional Indemnity policy
Singapore law requires certain professions to be insured: doctors, insurance brokers/agents, real estate agents, lawyers, etc. Regulations on niche professionals is required to ensure that the individual(s) do not suffer a huge financial loss due to claims payouts from Professional indemnity policies, hence being able to continue with the underlying project/ service till completion of their contract.
However, just because Professional Indemnity Insurance is not legally required for your business doesn’t mean that it’s a good idea to not have it. As long you offer professional advice in your work, you should have Professional Indemnity Insurance.
To calculate the amount of policy limit that is required to cover your legal liabilities, you first need to evaluate the job nature, your company’s financial health, as well as the statutory requirements of the country.
Project/ contract value will often stipulate getting a insurance policy as a condition to undertaking the project. In situations whereby there is no insurance covenants, calculate the total amount of legal liabilities you would have assumed if your client were to sue you for performance failure in these contracts and use that figure to instrument the design of the policy.
The professional should also consider the company’s ability to service its liabilities (i.e. operating cost, property lease, staff wages) should they be ensued in a legal battle and unable to operate the daily business. The company’s cash reserves should be used to run the daily operations, and let the insurance policy take care of legal cost and damages
Premiums start from as low as $42/month. Factors such as industry, coverage amount, and claims history are factored in the premium. Our online platform reduces the cost of delivering insurance, and we pass these savings back to you.
Professional Indemnity policies are tax deductible. When tabulating your tax return to IRAS, this premium is treated as expense in the company’s Notice of Assessment (NOA) submission. Evidence of payment could be substantiated by policy contract or premium receipt to support proof of payment, and hence it is necessary to keep a proper record of all business insurance purchases in the reporting year.
Whether you are doing your accounts by yourself or your accountant, insurance purchases can potentially reduce your tax payables and at the same time, give the company the assurance and protection it needs to grow the business. Talk to us to find out more on how you can get covered and benefit from a lower tax return.