When you ask yourself, just what is professional indemnity insurance, think about the sort of scenario below.
As the name implies, professional indemnity insurance is there to protect the professional – the insured – from any legal action that might be brought about through their actions.
Now let’s say, for the purposes of this illustration, that the professional we have in mind designs certain components for jet airline engines.
He might be a draughtsman, a technical designer, or an engineer. He might design the component on a drawing board, or have a master designed which is then supplied to the manufacturer for themselves to produce, or for a further supplier to produce.
A modern jet airline engine has thousands of parts and each one is designed to a working part of the whole.
But let’s assume our engineer has designed a new blade for a particular engine. This blade is drawn up and specified. These drawings and specification sheets are then passed to the supplier. They firstly forge the blade from a lump of metal and then machine it to a fine degree. Each individual blade is also tested by the supplier before it is sent onto the manufacturer.
A blade forms part of the fan which creates the thrust of a modern jet engine.
The finished blades are then taken by the engine manufacturer and placed within the engine. Such is the tracking employed by such companies, that each individual component used can be traced back to each supplier and the source of the material.
Okay so far. The engine is then supplied to the airplane ordered by the actual airline. The aircraft industry is slightly odd that the customer (the airline), has an option to choose the engines that suits its particular flying parameters. There are two main engine manufacturers and each airline has their favourite.
Next the airline – which has our example blade in the turbine – takes off on its maiden flight and suddenly, there is a metal failure and warnings lights flash in the cockpit. The airliner reduces power and is forced to return to the airport and make an emergency landing.
Engineers inspect the engine with acoustic equipment and pick up a minor crack in the engine blade. This appears to be the problem and although everyone is pleased that the aircraft made is back safely and that no-one is injured, the airline now has a huge bill and hundreds of cross passengers.
It asks the plane’s manufacturer to trace back the problem and informs them they are likely to be held responsible for the problems. They, in turn, pass the information onto the jet engine manufacturer and inform them that they will be looking for legal address to counter the plane’s manufacturer’s. This then goes throughout the process until the engineer who designed the blade is discovered to have made a mistake specifying the metal to be used.
And the engineer could face his own legal claim from the engine manufacturer for an incorrect design and specification. That is why he needs professional indemnity insurance, so that he won’t be taken to the cleaners for all he has.
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