Professional insurance includes every insurance related to the smooth and safe operation of your business. These types of insurance have become essential in Cyprus for a number of reasons:
- The public’s awareness of consumer rights has resulted in the proliferation of legal actions against companies and professionals.
- Due to the economic crisis, companies are under enormous pressure from their competitors and their creditors.
- The laws have been adjusted and some types of insurance are now compulsory (e.g. employer’s liability insurance, professional liability insurance, contractors’ all risks insurance).
- Many Cyprus companies have expanded their operations to jurisdictions where they are not entirely familiar with the legal system.
- Law firms are increasingly undertaking fiduciary duties.
- The sentiment of social justice will put pressure on regulators for the closer scrutiny of businesses.
- There is a rising crime rate.
- Cyber-attacks are becoming increasingly common.
The most important types of professional insurance are listed below.
- Employer’s liability insurance: This covers employers against claims arising from an employee’s injury or illness caused in the course of their regular duties at the workplace. For example, a worker is injured while using a machine. This insurance is compulsory by law.
- Public liability insurance: This insurance covers legal entities against third-party claims (i.e. claims by non-employees) for death, injury or financial loss due to negligence. For example, a customer is injured on a sharp edge in a store. This type of insurance is not compulsory, but is recommended for all businesses with a high number of visitors.
- PI – Professional Indemnity: This is a form of “liability insurance” protecting against claims made against companies or self-employed persons for wrongful acts which were committed in the regular course of their work and which cause the customers to incur financial losses. For example, an investment consultant advises his client to make a high-risk investment, which results in serious financial losses for the client. This insurance is compulsory for lawyers and real estate agents. It is recommended for all individuals offering consultancy services.
- Directors & Officers Liability Insurance (D&O Insurance): Even though this type of insurance is new to Cyprus, it is very popular abroad. This insurance protects a company’s directors from claims against them due to wrongful acts (such as negligence, false statements, mismanagement, inadequate supervision, ill-advised investments and so on). The claims can be made by creditors, clients, shareholders, partners, regulators, suppliers and so on.
- Fiduciary Liability Insurance: Due to its favourable tax system and flexible legislative code, Cyprus enjoys a great influx of funds and, as a result, many law firms undertake fiduciary duties. This type of insurance protects against violations of such duties. For example, the administrator of a pension scheme ignores, due to negligence, the beneficiary’s instructions to invest in the agreed fund and is therefore liable for this omission of his.
- Building and Equipment Insurance: This insurance covers damage caused to the company’s buildings or installations by a number of man-made and natural disasters (e.g. fire, theft, thunder, explosions, malicious acts, flooding, gas leaks, short-circuits etc.).
- Electronic Equipment Insurance: This protects businesses against the risks related to all kinds of electronic equipment (e.g. short circuits, flooding, theft, malicious acts etc.).
- Contractors’ All Risks (CAR) insurance: This covers risks related to construction works, such as occupational accidents, theft of materials from a construction site and so on. In the case of public works, the contractors are required by law to take out this insurance.
- Cyber-attack insurance: This insurance protects business from the risks related to the internet and to technology in general. It is recommended for businesses that have large databases where their customers’ personal data are kept (e.g. bank accounts). The basic cover includes losses due to data destruction, theft and hacking.
In addition to professional insurance, companies are encouraged to also consider two other types of insurance:
May you have any queries, don’t hesitate to contact us.