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WHY PI INSURANCE?
Are you held to a higher standard? Regardless of your level of experience, mistakes can happen. You may unintentionally breach privacy, make an error of judgement or provide incorrect advice. In the unfortunate event that your business faces allegations of negligence or instances of professional malpractice, the financial penalties and reputational damage can be significant no matter what size your business is.
Businesses that provide opinions, advice, design or specification run the risk of claims against them if the advice or design turns out to be unsatisfactory. This can happen to the most fastidious and capable of professionals.
Professional Indemnity Insurance (also called Errors & Omissions Insurance) protects your business from the legal costs and claims for liabilities associated with allegations of professional negligence including the legal costs incurred in the defense and investigation of the claim and any compensation required to be paid by the insured in order to dispose of the claim.
Even if you’re not at fault, you may have to spend significant amounts on legal fees to prove that the liability isn’t yours. That’s why we work hard to deliver expert risk advice, unrivalled service and placement of tailor-made Professional Indemnity policies to protect you and your business should something unexpected happen.
Any business or individual providing advice or design to their clients should consider a professional indemnity insurance policy. This includes Lawyers, Accountants, Engineers, Architects, Consultants, Land Surveyors, Quantity Surveyors, Project Managers, Medical Providers, Brokers, Valuers, Investment Advisors and Real Estate Agents.
WHAT YOU NEED TO KNOW
What Is Professional Indemnity Insurance?
Professional indemnity Insurance is a type of business insurance for companies and consultants which provide professional services to clients. It can help cover the cost of compensation and legal fees if you’re accused of providing negligent services or poor advice that leads to losses or damage for your client. Whether you’re in financial services or digital marketing, any organisation which provides a professional service or gives advice could be sued if the recipient is unhappy with their work. A customer might say you were negligent, delivered the wrong training or made a mistake which cost them money. As a professional, you take pride in doing great work, but if disagreements occur, this cover can help with the cost of putting things right – including legal fees and any compensation
Who Needs Professional Indemnity Insurance?
Professional indemnity insurance is not a legal requirement but professionals who work in certain sectors should still consider it one of their core business needs. This is because some industries are much more likely to suffer service-based disputes than others. Some clients may choose to make this insurance a contractual requirement or your industry regulator might say it’s essential.
How Much Professional Indemnity Insurance Do I need?
The amount of PI cover your business needs will depend on the nature of your work and the type of clients you service. If you work with large organisations in heavily regulated industries, then your professional indemnity requirements are likely to be higher. The first step to gauging how much PI cover is necessary for your business is to ask your clients how much they would expect. After all, this type of policy brings confidence to them as well as you. A minimum threshold may also be specified by a governing body you belong to. Otherwise, consider how much it might cost to rectify a worst- case scenario disagreement, including legal fees and losses incurred. This number can provide a guideline for how much professional indemnity insurance you need. You should also ask questions such as ‘do I have sufficient staffing capacity and cash flow to rectify big mistakes?’ If the answer is no, then your business could benefit from higher-value PI cover. The cost of professional indemnity insurance depends on several factors, including the value of the cover you take out and the nature of your work.
How Much Does Professional Indemnity Insurance Cost?
The cost of professional indemnity insurance will vary from business to business. As the level of cover, number of employees, annual turnover and risks associated with your industry are all factored in, there is no average professional indemnity cost. Professional indemnity insurance is designed to cover your business in the event legal action is undertaken against you. It will cover any legal costs that may arise, as well as damages and court fees awarded to the defendant. It will also cover any work you have previously carried out in the event a client claims your work was substandard.
When Should I Take Out Professional Indemnity Insurance?
On the assumption that your business needs PI insurance, that you offer advice or professional services for example, then you should consider buying a policy from the first day you start trading to cover any room for errors and omissions from day one. When buying a policy, one question you will be asked is from when you want the policy to run. If you have an existing PI policy in place, you should tell the new insurer the date that existing policy started – this becomes the “retroactive date”. The new policy will then start (the “inception date”) and work done before the inception date with the new insurer, all the way back to the retroactive date, will be included.
What Is A Retroactive Date In A Professional Indemnity Policy?
A retroactive date is the date from which you have held uninterrupted professional indemnity insurance cover (even if you changed insurer during this time) or a date in the past from which your insurer has agreed to cover you. Any claims that arise from events prior to this date is not covered by your insurance
Is My Past Work Still Covered After I cancel My Policy?
No, it's not. Professional indemnity cover is usually offered on a claims-made basis and this means that your insurer will only cover you for claims that are brought against you DURING the term of your policy. If a claim is made against you after your policy has expired – even if the incident occurred while your policy was in place – you will not be covered for that claim. For example, if an incident occurred in 2014 when you had professional indemnity cover, but the client brings a claim against you in 2015 – after your policy has expired – you will not be insured for that claim. Therefore, a valid policy must always be in force for a claim to be met by an insurer.