Professional indemnity quotes and premium
How much does professional indemnity insurance cost and how do we obtain competitive quotes?
Professional indemnity insurance cost 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 a premium
If you provide a service or advice to your customers, professional indemnity insurance will be the most important business insurance you purchase. It can also be the most expensive, given it will cover legal costs and claims for mistakes, errors or omissions. Depending upon what professional services you provide, the amount of cover required, the cost to secure PI insurance can vary significantly.
Professional indemnity insurance is mandatory for many professionals selling their skills or specialist knowledge based on their experience or qualifications. If not mandatory, the cover is commonly required under contract to ensure protection for financial losses that your client may suffer as a result of your professional negligence, breach of contract, or breach of professional duty.
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What impacts your professional indemnity insurance premium?
Turnover
The last reported turnover (or projected if a startup) is an important factor given it shows the amount services you provide to your clients. Typically, your most recently reported turnover. Obviously, the more work you undertake the increased exposure to errors, omissions, and subsequent claim for damages. Additionally, insurers will typically want to understand the nature and size of your contracts - which provides an indication of future claims, with larger scale projects typically carrying increased professional indemnity insurance premiums.
Professional services
What professional service you provide to your clients is a key rating factor because different services will have higher or lower degree of exposure of future claims. Some industries such as financial services are more prone to litigation and will carry significantly higher professional indemnity costs. It is important to note that your Policy Schedule correctly reflects your business activities because if you provide professional services that are not associated then you could find yourself without cover.
Experience
Your experience and professional qualifications will acts as an indicator of your 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 number of years you have successfully traded without claims will mean a discount to your premium. An extended period of successful trading without any claims means you are likely to obtain a further professional indemnity insurance discount.
Contract management
Contractual conditions provide the first line of defence against a compensation claim made against you. Therefore, insurers may require you maintain certain contractual conditions. Your premium and availability of cover can be impacted if your contracts do not maintain: (1) a description of services; (2) limitations of liability; and (3) a consequential loss exclusion. Lack of standard contracts that mitigate your exposure and legal vetting can indicate a reduced level of risk management and appreciation for the liabilities being accepted.
Law and jurisdiction
Most professional indemnity insurers will not provide cover for compensation claims under US law and jurisdiction unless you specifically negotiate the coverage extension. If you contract with US clients, it is recommended you do so under UK law and jurisdiction to keep your costs lower. If disputes under contract are agreed to be held in a US court this will need to be declared to your PI insurer and will have a significant impact on the premium, due to its litigious nature and high damages awarded.
Claim history
The number of years you have successfully traded without claims will mean a discount to your premium. An extended period of successful trading without any circumstances means you will obtain favourable professional indemnity premiums. Whereas, high claims severity or frequency, with a lack of remedial action can indicate a lack of quality risk management and systemic issues. It is recommended that any claim activity is described in detail - which means identifying whether the claim is still open, how much has been paid to date, and what is the current reserve.
How to obtain professional indemnity insurance quotes?
1. Representation - to access the wholesale market you'll need to use an professional indemnity insurance broker. We are experts that can help you decide what type 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 your application fairly could mean part or all of your claim is declined.
4. Business activites - all PI 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 rely on your policy, you don't want the uncertainty that cover hasn't been granted due to the insurer's insolvency.
Example professional indemnity costs:
Small achitectual firm (turnover £50,000) pays £425 annually for £1m PII
Software provider (turnover £1.5m) pays £3,500 annually for £2m PII
Tax accountant (turnover £2.5m) annually pays £35,000 for £2m PII
How to secure the best professional indemnity cover and cost?
Information that identifies how your business represents a better than your industry peers can increase the availability of cover and reduce your cost. Insurers will consider professional indemnity discounts where evidence of compliance procedures, risks assessments and/or complaints register demonstrate your risk averse nature and high level of due diligence. All the insurers we work with are overseen by the Prudential Regulation Authority and Financial Conduct Authority and have an AM Best rating of A+.
Either arrange a call back or complete our digital onboarding process to obtain your PI insurance quote.
Why compare professional indemnity insurance quotes?
There are only a handful of professional indemnity insurance 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 or brokers. Cover and premium rates continue to change, so does your business and its insurance needs. It's prudent to compare PI insurance quotes to ensure you continue to buy the most appropriate and cost-effective protection.
Frequently asked questions
What is professional indemnity insurance?
Professional indemnity insurance can offer protection against negligence, breach of contract, defamation, breach of privacy and intellectual property infringement. Professionals need to ensure they have sufficient business insurance to guard against claims for financial compensation in providing their services. PI insurance claims can be costly and time consuming, even if the allegations are without merit.
Who needs professional indemnity insurance?
Professional indemnity insurance should be considered by persons selling their skills and specialist knowledge based on their experience or qualifications. Such people are relied upon as being experts in their fields and hold a greater level of knowledge and specialism in their subject matter than the average person.
Why professional indemnity insurance is important?
If a client feels you haven’t delivered under the terms of your agreed contract or have been negligent, in an increasingly litigious society they may consider seeking financial recompense through the courts. Businesses need to ensure they have sufficient cover to guard against claims for financial compensation. Professional indemnity cover allows your business to trade with the knowledge you have access to legal and financial support if required.
Additionally, a PI insurance policy can enhance your reputation and increase client trust. It reassures clients that they will be compensated if they suffer a loss due to your advice or service. While, for certain professional bodies, holding PI cover is mandatory to comply with regulatory, industry body, or licensing requirements.
Do we need public liability insurance?
If your business interacts with members of the public, you have a duty of care to maintain a safe environment. Public liability insurance offers financial protection should an accident occur which causes injury or property damage. Public liability insurance will cover claims from any person, excluding your employees, with whom you interact as part of your business. Including, but not limited to customers, suppliers, contractors, and other third persons.
Do we need employers liability insurance?
Employer's liability insurance is a legal requirement for any business that has employees. The cover means your business is protected from having to make significant compensation payments because of injury or illness of your employees. Awards may include payments for medical bills, lost income, and their legal costs. Claims can become very expensive if a person is unable to return to work and support themselves.
What other business insurance should we consider?
The type of business insurance you need will be determined by several factors, however your business activities, and workplace are the most important. For example, if you operate a warehouse, your needs are different compared to a company operating from an office.
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