Professional Indemnity Insurance
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Professional Indemnity Insurance
The need for professional indemnity (PI) cover has grown over the past several decades. This is because, more people enter professional service-based occupations. PI insurance (PII) still covers ‘traditional’ professionals. For instance, doctors, solicitors, accountants and architects. However, a new market of professionals (including anyone providing advice, design, specification etc) now need to consider PI cover. Whether a traditional or new professional, you can protect yourself, your business and your reputation by investing in professional indemnity insurance cover.
Professional Indemnity insurance safeguards against economic losses in the event of a legal action. Subject to policy terms and conditions, a PII policy provides indemnity in respect of liability at law for costs and expenses in respect of any breach of professional duty which may be made against an Insured, by reason of any neglect, omission or error occurring or committed in good faith. It is important to note that a PII policy will only cover:
- Claims arising out of the declared business activities
- Claims made (and/or notified) during the period of insurance
- Claims where all policy terms and conditions have been complied with
The need for professional indemnity cover has grown over the past several decades as more people enter professional service-based occupations.
Who Needs PI Insurance Cover?
PI cover is appropriate for anyone who, gives advice and makes educated recommendations and designs solutions. As well as anyone who represents the needs of others. Professionals such as accountants, engineers, IT consultants, software developers and planners. Additionally, estate agents and contractors are prime candidates for carrying PI insurance. The main reasons professionals seek out Professional Indemnity insurance is because it is:
- Legally required for their profession
- A regulatory requirement. Many professional organisations, such as the Architects Registration Board, require their members to have PI insurance before they can practise
- Contractually required by the customer
- Provides protection against potential legal costs and expenses
PI Policy Overview
PI insurance offers protection for errors, omissions and other professional liability issues. These policies can include legal defence costs, damages and compensation. This is due to professional negligence, which can be substantial.
PI policies generally have both a ‘claim limit’ and an ‘annual limit’. The claim limit is the maximum amount that will be paid for any single event. In addition, the annual limit is the maximum that will be paid in any one year.
There are common exclusions typically found in PI policies. These are including liability for non-financial losses and intentional, dishonest or fraudulent acts by the professional.
Professional Indemnity Insurance for Different Occupations
At Insurance2day we can arrange professional indemnity insurance for a broad spectrum of occupations, including (but not limited to):
- Business Consultants
- Careers Advisory Service
- Company Registrar/Company Search Agents
- Computer Consultants
- Computer Programmers
- Corporate Identity Consultants
- Counselling Service
- Data Processors
- Energy & Fuel Efficiency Consultants
- Engineering Design Consultants
- Graphic Designers
- Handwriting Expert
- H.R. Consultants
- Health & Safety Consultants
- Immigration Consultants
- Interior Designers
- Interim Managers
- Inventory Clerks
- I.T. Contractors
- Landscape Architects
- Management Consultants
- Marketing Consultants Management Training
- Market Research Consultants
- Ofsted Inspectors
- Personnel/HR/Training/Careers Advisors
- Procurement Consultants
- Public Relations Consultants
- Quality Assessors (including Investors in People)
- Secretarial service
- Small Business Advisory Service
- Software Consultants
- Telecommunications Consultants
- Training Consultants
- Web Site Designers
Why Are PI Insurance Premiums Increasing?
A combination of factors have led to the hardening of the professional indemnity insurance marketplace since 2020. Unfortunately, the market is still going through a tumultuous period. For instance, the tragic events relating to the cladding at Grenfell Tower. As well as the subsequent uncertainty resulting from the Covid-19 pandemic. Both of these have resulted in a number of carriers completely exiting the marketplace. The insurers that have survived have had their capacity reduced. The result being:
i) Far tighter underwriting criteria
ii) Lower limits being offered
iii) There is a significant move towards cover only being offered on an ‘aggregate’ limit basis for some professions.
What Can We Do About It?
In response to current market trends, we continue to expand our panel of insurers. However, the quality of your submission has never been so important. In the past insurers may have asked for clarification in respect of any unanswered / incomplete proposal form questions. However, they are now more likely to just decline to offer terms. Insurers make underwriting decisions based on a variety of factors. The quality and clarity of information presented to them really can make a difference. This is in terms of both the levels of premium quoted and willingness to provide cover.
How About If I Cease Trading or Retire?
Professional Indemnity policies operate on a ‘claims made’ basis. They provide cover for claims made (and reported to an insurer) during the period of insurance cover only. Once a policy has expired there is no cover in force in respect of claims that may arise. This leaves you exposed years into the future after you retire or stop trading for mistakes you made in the past, which is why you should consider run-off cover.
Visit our Frequently Asked Questions section for further information about Professional Indemnity Insurance.
If there is any aspect of your Professional Indemnity Insurance arrangements you would like to discuss, please complete our Call Back Request form below:
or Call Us on 01384 442 165 during Office Hours (Monday – Friday, 9am-5pm)
We will gladly discuss and review your insurance requirements, and answer any questions you may have