Professional Indemnity Insurance
Professional Indemnity Insurance provides essential financial protection for a wide range of professional advisers. In the event that a client suffers financial loss as a result of alleged neglect, error or omission Professional Indemnity Insurance will meet the cost of defending claims and any damages payable.
Any person who gives advice, designs, or offers similar services in a professional capacity is seen by clients as an expert. In these times of high consumer awareness, clients will not hesitate to pursue a claim if they feel that they have received sub-standard service. The need for Professional Indemnity Insurance has never been greater.
While some professional people see Professional Indemnity Insurance as an expensive and unnecessary overhead, we know from experience that any professional can produce substantial claims. Court awards have risen sharply in recent years. Without professional indemnity insurance, the financial security of a business is threatened.
Many businesses need to carry coverage based upon the conditions of a contract. However, make sure to never purchase professional indemnity insurance just to cover a particular contract for its duration. All professional indemnity insurance is written based upon "claims made," meaning that it is the policy you have in force when the claim is made that pays benefits, not the policy you had when the work was carried out. Therefore, if you complete your contract and then drop your professional indemnity insurance coverage, you have no coverage in place if a claim comes in subsequently. When you take professional indemnity insurance, you should consider it a long-term commitment.
When you're doing your homework and comparing quotes, make sure you're doing your comparison on a "like for like" basis. All professional indemnity insurance policies should carry the minimum coverage as described above, but many professions require that you have additional coverage that is found in policies designed especially for them. Look out for limits of indemnity, whether they are for "any one claim" or "in the aggregate." You should also watch out for excesses; these both can vary from insurer to insurer.
If you already have professional indemnity insurance and you're changing to another insurer, you have to ensure that the new professional indemnity insurance policy has retroactive coverage built into it to cover work that you've carried out in the past.
You should note that professional indemnity insurance coverage premiums are increasing rapidly. There are also many fewer insurers than there were a year ago. Those that remain are becoming increasingly selective about the risks they take and they are also significantly increasing their premiums in tandem.