Professional indemnity insurance, also known as errors and omissions insurance or PI insurance, is a liability policy that provides businesses and professionals protection from financial losses whilst providing a service or advice. A policy will provide coverage for the legal costs associated with defending claims and provide for damages awarded by the courts. If you provide a service to your customers, this will be the most important protection available to your business to guard against claims for compensation.
Professional indemnity cover can extend protect against a range of civil liabilities including negligence, breach of professional duty, breach of contract, defamation, breach of privacy, employee dishonesty and intellectual property infringement. Each insurers policy can provide different cover, conditions, extensions and exclusions, so its important you understand what your coverage includes and excludes.
Many businesses and professional need indemnity insurance as a regulatory requirement or to meet contractual conditions. However, the cover should be considered where advice, professional, or technical services are offered to a client. Professionals need to ensure they have sufficient protection to guard against demands for financial compensation in providing their services. Professional indemnity claims can be costly and time consuming, even if the allegations are without merit.
Contractual conditions can offer valuable protection against civil liabilities, however it should be remembered that damages could be awarded by a court over and above what you have agreed under contract. A written description of services, limitations of liability, and consequential loss exclusions are standard approaches to contract risk management.
There are only a handful of professional indemnity providers that provide their solutions directly to the customer on a B2C basis. The vast majority of insurers will only offer their products through licenced intermediaries. At Get Indemnity we a specialist insurance broker that ensure you achieve value for money and are covered in the event you need to rely on your insurance protection. We work with a wide range of insurers to ensure we provide our clients with the most competitive terms from the market. Please give us a call to dicuss your requirements on 0345 625 0711.
Helps clients to have the confidence engaging with your business with the knowledge that you have the correct insurance policies in place.
Allows you to meet your regulatory and professional body requirements in offering financial protection when offering advice or a service to your clients.
That legal defence costs and damages are covered for negligence, mistakes, omissions or breaches of client contracts, whilst providing advice or a service.
Many businesses do not appreciate the need for professional indemnity insurance - this can occur when there is not a legal requirement, or the offering of services only forms part of the business offering. Underinsurance isn't uncommon and then businesses will unfortunately face having to pay costly legal fees and compensation claims to put their customers back into the same financial position as they were before.
The amount of professional indemnity insurance you decide to take out will be determined by a number a factors, including whether you are required to meet any contractual or regulatory requirements. The second most important determining factors are the size of your business and the size of the contracts you undertake. We ask our clients to consider, if you fail to deliver your services or were negligent, how mow much could your client's lose financially, including consequential and indirect losses? It's then worth considering that defence costs can typically amount to half the damages awarded if the dispute is rebuffed through the courts.
We can guide you through the process of buying business insurance to ensure you achieve value for money. As with any purchase you should consider your options to ensure you purchase the necessary and appropriate cover for your business at a cost-effective premium. Speak to one of our account executives on 0345 625 0711
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1. Representation - to access the market you'll need to use an insurance broker, we are experts that can help you decide what type of insurance and level of cover you need, and recommend a suitable policy that meets your needs.
2. Right approach - quotes can be provided on a 'Statement of Fact' basis, or we will ask you to complete a proposal form depending upon the industry you work and the size of your business.
3. Correct disclosures - all statements disclosed, statement of facts, should be full, true and accurate and given after undertaking a reasonable search. Deliberate or reckless failures to present the risk fairly could mean part or all of your claim is declined.
4. Professional definition - all PI insurance policies will refer to a definition of professional service. It's important this definition is broad enough to capture your activities and sufficient information has been disclosed to ensure you are covered.
5. Terms and conditions - cover offered from the market can vary - the triggers of a policy, the insuring clauses, definitions, conditions and exclusions can be different. Unless you are an expert it can be hard to distinguish between the different policies.
6. Rated security - the insurers reputation for paying claims is an important consideration. If you need to reply on your insurance policy, you don't want the uncertainty that cover hasn't been granted to protect your interests.
Professional indemnity insurance premiums can start from £332 annually for a limit of £1 million. However your insurance costs will be dependant upon a number of different rating factors. It is not unusual for annual premiums to be +£10,000 if you opperate with a higher degree of risk. Understanding the rating factors that influence insurance premium is important to effectively managing your ongoing costs.
Below are some associations, regulatory and industry bodies based in the UK, that requires the cover:
Any healthcare practioner, such as a nurse or pharmacist, will need to consider medical indemnity insurance, also known as medical malpractice. The cover will protect against compensation claims for a failure to exercise reasonable skill and care.
Business insurance is considered an ‘allowable expense’ which you don't pay tax on. Therefore, when calculating your taxable profits for your tax return you can deduct allowable expenses from your income.
An architect specifies inadequate materials for a construction project and a client claims £250,000 to rebuild. A software developer accidentally corrupts files on a client’s system and claims for £550,000 for loss of intellectual property. An advertising agency releases on online campaign with incorrect information and the client claims £2,000,000 for damage to reputation.
Typically, there are commonly two types of professional indemnity policies available: (1) A 'Professional Negligence' policy which provides cover for breach of professional duty of care by way of negligent act, error or omission - there is no coverage for claims based on breach of contract or statute law; and (2) 'Civil Liability Insurance' policy which does not limit cover as to the nature of the wrongdoing - the cover may include breach of duty of trust, conflicts of interest, breach of statute law and defamation. These may not necessarily arise from negligence and therefore may not be covered under a professional negligence indemnity policy.
Both covers will pay legal defence costs and damages to compensate another party, however the circumstances covered by the different policies are different. Public liability insurance, will protect against claims arising from injury or property damage of persons other than your employees in the course of your business activities. Whereas, professional indemnity insurance will help protect your company against the failure to exercise reasonable skill and care when providing a service to a client.
A professional indemnity retroactive date will exclude services provided or work undertaken that occurred before the date specified on the policy schedule. If you have not purchased professional indemnity insurance before, the retroactive date will be when the policy first incepts. To maintain contious cover for prior acts you will need to renew the policy, typically on an annual basis. However, it's worth noting you do not need to renew the policy with the same insurer because your retroactive date can be transferred from one policy to another.
Every business should consider a risk management process to identify and manage risks that can prevent the business from meeting its strategic objectives. The process goes to the centre of the business and will impact how you deal with customers, employees, regulators and shareholders.
Insurance excess is the amount you have to pay towards the overall cost of an insurance claim. This will be identifed in your policy schedule and you will need to contribute that amount towards each and every seperate claim.
A Certificate of Insurance is a document that provides evidence of your insurance. It typically outlines the key covers provided, policy numbers, insurance company, amount of cover offered, and is provided either by your insurance broker or insurance company.
The Financial Conduct Authority (FCA) regulates the financial services industry in the UK. Its role includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers.
A professional indemnity insurance policy can not only provide financial protection, by shielding you from substantial losses resulting from legal proceedings, compensation claims and damages. It can demonstrate accountability and responsibility, by promoting client trust and enhancing your professional reputation.
Your business will need professional indemnity insurance if you provide a service, advice, consultancy, design, plans or specifications to a client.