How to calculate your professional indemnity insurance cost?

Business Insurance FAQ

Professional indemnity premium

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Understand what you can do to manage your professional indemnity insurance cost
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Take an insurers view and appreciate what they consider when calculating your premium.
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Professional indemnity insurance rates have been increasing, talk to a specialist broker.

Professional indemnity premium

tick
Understand what you can do to manage your professional indemnity insurance cost
tick
Take an insurers view and appreciate what they consider when calculating your premium.
tick
Professional indemnity insurance rates have been increasing, talk to a specialist broker.

By Simon Taylor (ACII) - Published: 26 June 2021

Professional indemnity insurance cost

Professional indemnity insurance rates will vary from to insurer to insurer. Each will take a view on the amount of risk you pose and allocate a price, otherwise known as an insurance premium.

At get indemnityprofessional indemnity insurance pricing starts at as little as £332 per year for a £1 million limit. However, we work with a number of insurers and that premium cost will change depending upon a number of factors we discuss below.

The main drivers for your professional indemnity cost will be the industry you work, services you offer to your clients, the professional fees earned and exposure to increased risk factors. 


    How do insurers calculate your professional indemnity insurance premium?

    The size of professional fees generated will bear a direct relationship to how insurer will measure and calculate your professional indemnity cost.

    The allocation of fees between different professional services and the perceived exposure attaching to each will impact your professional indemnity premium.

    Experience acts as an indicator of the applicant's ability to: 1) provide accurate advice or services; 2) match advice and services to the client's needs; 3) manage client expectations; 4) recognise and mitigate client dissatisfaction.

    The allocation of fees between counties and which jurisdictions you contract your customers (UK, USA, Canada, Europe, Rest of World) will directly impact insurer's professional indemnity cost calculation.

    Financially stable applicants are less likely to change their business model, engage in M&A activity and downsize staff, potentially impacting their ability to service clients with whom they are contractually bound.

    Reliance on any one client can lead to a situation whereby the applicant does not share the insurers interest in resisting spurious claims, therefore commercial interests are in conflict.

    Excessive fees compared to contract values can indicate a higher perception of risk compared with industry standards can negatively impact your professional indemnity insurance cost.

    Lack of standard contracts that mitigate your risk and legal vetting can indicate a reduced level of risk management and appreciation for the liabilities being accepted.

    The nature and size of an applicant's typical projects can indicate the level of exposure posed, with larger scale projects typically carrying increased risk.

    Frequency and severity of claims with a lack of remedial action, can indicate a lack of quality risk management and systemic issues, will signifiantly affect your professional indemnity premium.

    Complete our digital on-boarding process and we can collate information that allows us to negotiate competitive professional indemnity pricing from the wholesale market.


    What are insurers contractual preferences when calculating your professional indemnity cost?

    Contractual conditions can offer valuable protection against insurance claims. Therefore, insurers may require you maintain certain contractual conditions.

    Your professional indemnity cost and availability of cover can be impacted if your contracts do not maintin:

    >  a description of services;
    >  limitations of liability; and
    >  a consequential loss exclusion.

    Insurers prefer if you offer a performance standard no greater than reasonable care and skill. Preferred contracts will not include: guarantees or warranties; liquidated damages (promise to pay if a service is not performed); or assume a third party's liability.

    At get indemnity™, we have the knowledge to identify which insurers have the capacity to offer your profession the most competitive terms. Complete our online application to compare professional indemnity insurance cost from the wholesale market.

    Read more about professional indemnity insurance and how it can protect your business from costly legal expenses and damages awarded by a court.