Business Insurance Professional Indemnity Vs Indemnity To Principals

[eve1974]

Hello

Our business insurance policy has a clause saying indemnity to principals. I assumed this was the same as professional indemnity. But its not.

What is the difference please?

Thanks

[fiction-factory]

This may help
https://www.policybee.co.uk/blog/6877/insurance-speak-for-beginners

[fiction-factory]

From the link:

Indemnity to principals. If a client alleges you’ve been negligent, and sues you for their losses, your professional indemnity insurance covers it.

But if, because of your negligence, your client (the ‘principal’) is sued by their client, an indemnity to principals clause in your policy means your insurer has to cover your client’s client’s losses too (the ‘indemnity’).

If you’ve spotted an indemnity to principals clause in a client’s contract, you’ll need to ask your insurer if they’re happy to cover it. Whether they will or not depends on the work you’re doing, and how much it’s worth. Don’t assume it’s covered.

[eve1974]

Thank you both of you - still confused but this has started to clarify it a little.

[fiction-factory]

Happy to help. But I don't mind if you give Best Answer to the other guy.

[Deskdiary]

Professional Indemnity - protects the policyholder against claims brought against them by a third party for the third party's financial losses which have arisen as a result of errors and omissions of the policyholder (e.g, a lawyer giving wrong advice which causes a financial loss to their client).

Indemnity to Principals - Indemnity will apply under a policyholders policy in like manner to the principal where the contractual arrangement between the principal and the contractor so required.

They are two entirely different things.