Do I need Professional Indemnity Insurance?
Professional Indemnity Insurance (PII) is a must for most professional trades but not all. Whilst it is not considered to be a legal requirement, most regulatory authorities will insist a company carry PII cover to trade authentically. The level of indemnity cover that a company must carry is also sometimes dictated to them by regulators however others will decide on what they feel is appropriate or sufficient based upon their scope of work or individual risk factors.
What is Professional Indemnity Insurance?
Professional indemnity insurance covers financial loss as a result of incorrect professional advice or negligence. Common trades to take a professional indemnity insurance are Architects, Surveyors, Accountants, Engineers, Business Consultants, IT Consultants, Insurance Brokers and Solicitors.
A professional indemnity insurance claim example…
An Architect was appointed to design and build an extension to an existing structure. In preparation for this the existing drainage surrounding the property was in need of being re-direct. Drainage works were instructed, complete, and foundations laid. It soon became apparent that the new drainage system was failing and backing up with sewage leaking into the grounds of this and neighbouring properties.
Compensation was made for the damages to others and also costs paid for the additional expenditure to the build.
Your current professional indemnity policy also provides cover for retro incidences dependent on that a PII policy is live at the time the claim is made. It is important to keep a PII policy continually running with no gaps in cover, and also to let it run-off for a few years after a business has ceased to trade. This ensures cover is there for any potential late claims that might arise.
What is Public Liability Insurance?
Often professional indemnity insurance is confused with public liability insurance but it is important to note that they are considered to be two different types of insurance covering different risks. PII will cover financial loss as a result of professional advice, public liability will cover compensation for injury or damage to a third-party persons or property normally following a physical accident. It is a good idea to take out both of these insurances to protect your business further and most insurance companies can offer both alongside each other.
How much is Professional Indemnity Insurance?
There are lots of varying factors that will affect the cost of a professional indemnity insurance policy in the UK and in some cases it has become one of the biggest business expenditures trades must consider. As a result of the late uncertain times that we have all experienced, the PII market has also become very unsettled with professional indemnity insurance companies being increasingly selective on cover and premiums. The majority of PII business is now handled by Lloyd’s Syndicates and London market insurers that only some insurance brokers have access to – AIC being one of them. Protecting your business at an affordable cost is the job of a good broker to shop around in getting you the best deal.
Please talk to one of our advisers, who will guide you through what is available and give you the information that you need to make a decision. Call 01442 242400 or make contact here today.