Indemnity
Insurance
Professional Indemnity Insurance Defined
Professional indemnity or "PI" insurance is insurance that is designed
to protect businesses that offer professional advice or services.
Types of professions that might require professional indemnity
insurance include consultants, Web or graphic designers, bookkeepers
and advertising agents.
What does professional indemnity cover?
Professional indemnity protects against claims relating to
"business injury," meaning any financial loss suffered as a result of:
-
Any negligent act, error or omission
-
Implied statutory terms, such as those that relate
to the Sale of Goods and Services Act of 1982, the Sale of Goods Act
of 1979, and other similar legislation, including anything that
pertains to Common Law
-
The unintentional infringement of intellectual
property rights
-
The loss of documents or data entrusted to the
insured
-
Libel, slander or defamation that was not
intentional
-
Accidental or unintentional breach of confidence or
confidential duty, or misuse of information
Professional indemnity pays all reasonable costs incurred in
the defence or settlement of any claims arising from situations as
described above, such as legal fees.
How much does professional indemnity insurance cost?
Premiums for professional indemnity insurance vary greatly depending
on the profession involved. For example, an environmental consultant
will pay more for premiums than will a marketing or IT consultant, for
a comparable amount of coverage.
Premiums can begin as low as £165
pounds for £100,000 pounds of coverage if your profession is low-risk.
To obtain a quote for your business, look online for faster results.
Should you get professional indemnity coverage?
If you are involved in providing professional advice or services, you
should consider professional indemnity coverage. Examples of
businesses that would benefit from such coverage include but are not
limited to:
-
Business advisers or consultants
-
Market research consultants
-
Graphic designers
-
Web designers
-
Human resources consultants
-
Translators or interpreters
-
Professionals involved in office services, including
bookkeepers
-
Management consultants
-
Market research consultants
-
Advertising agents
-
PR consultants
-
IT consultants or companies
-
Telecom consultants
-
Training consultants
-
Authors and other writers
-
Health and safety consultants
In addition, any professionals who give advice, such as architects,
surveyors or engineers, should consider this type of insurance
coverage. Based upon the risks your profession involves, insurers may
require more information from you than those above. Make sure to have
the necessary information available.
What you should look out for...
Many businesses need to carry coverage based upon the conditions of a
contract. However, make sure to never purchase 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
coverage, you have no coverage in place if a claim comes in
subsequently. When you take a 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 policies should carry the minimum coverage as described
above, but many professions require that you have additional coverage
that is found in policies designed specially for them.
You should
watch 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 policy
has retroactive coverage built into it to cover work that you've
carried out in the past.
You should note that indemnity 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.
To find out more about professional indemnity policies coverage for
your business, click on the banner below and visit More Than.
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