Buying professional indemnity insurance can be quite an involved process, as we need to get to know your business and ascertain the right level of cover for you. We have the expertise and the time to explain everything that is involved to talk you through all the paperwork that needs filling in and to ensure the process is as smooth, simple and quick as possible.
What is professional indemnity insurance?
You will need professional indemnity insurance, also called PI insurance or indemnity insurance, if you provide advice to your clients, handle data belonging to a client or are responsible for a client’s intellectual property. Professional indemnity insurance helps protect you if claims are brought against you by a client because of a problem arising from the work you have done for them.
Professional indemnity insurance is different to most other insurances as once a policy expires, you are no longer protected from any future claims that may arise from past work.
Who needs it?
Accountants, marketing consultants, graphic designers, IT consultants, business consultants, journalists, architects, financial advisors and engineers are all types of business that often take out professional indemnity.
If you provide a professional service, especially advice, intellectual property and could be challenged on your work or the advice you give, you are vulnerable to a claim of negligence when professional advice or services fail to meet a client’s expectations and cause financial loss, regardless of how confident you are in your abilities.
Professional indemnity policies offer cover for the compensation you may need if you make a mistake or are negligent and need to cover any legal costs, or pay to have a mistake corrected.
Even if your business has ceased trading, claims of professional negligence can still be brought against you so ‘run off cover’ is particularly important for ex- or retired business owners. Without it they would have to finance the defence of the claim themselves.
It is important to understand that your policy needs a ‘retroactive date’, ideally from the day you started trading. When changing policy providers it is important that the retroactive date remains the original date, not the new policy date, as any claims relating to work completed/started before the ‘retroactive date’ may not be covered. Some professional indemnity policies can seem cheaper because they do not include or have an appropriate ‘retroactive date’.
Any one claim and aggregate policies
The difference between an ‘any one claim’ policy and an ‘aggregate’ is that any one claim provides cover up to the maximum limit for each claim made, but an ‘aggregate’ policy will only provide cover up to the full limit for ALL claims made in the period of insurance.
For example if two £85,000 claims are made on an £100,000 ‘any one claim’ policy, the costs of both claims would be covered as they are both under the £100k policy limit. But if it was a £100,000 aggregate professional indemnity policy, the limit for all claims is £100,000 so £60,000 would need to be covered by other means.
An ‘any one claim’ is therefore the more comprehensive option, but the basis of cover varies depending on your business activity, which is why it’s important that we go through everything with you and get you the right cover. Call us today to protect yourself, your business and your clients.