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The following is a guest post. Enjoy!
Setting up and running a business is a complex task that requires much planning and dedication. And precisely because so much effort is involved, it only makes sense that professionals and business people would want to protect the source of their livelihood. This is where professional indemnity insurance comes into play.
But, as it happens with other types of insurance, it is often difficult to make a decision when it comes to choosing a suitable insurance provider. In this post, we list the best tips to help professionals find the right professional indemnity insurance cover.
Professional indemnity insurance: who is it for?
Purchasing professional indemnity insurance should be considered by any professional who wants to be protected against compensation claims. Clients can sue a professional if they suffer injury or financial loss as a result of inaccurate advice, errors, omissions, and faulty goods or services. Therefore, it is common for solicitors, medical professionals, architects, accountants, consultants, freelancers, pharmacists, translators, therapists, and psychologists to be covered by professional indemnity insurance.
It must also be noted that some professionals are required by law to have professional indemnity insurance before they can take on clients. In the United Kingdom, financial advisors, accountants, surveyors, architects, engineers, and IT consultants must be covered by professional indemnity insurance. In other professions, the relevant trade associations might require members to be insured.
To sum up, it is a good idea to have some level of professional indemnity cover, even in professions where this type of insurance is not mandatory. This can protect business owners and their companies and give them additional peace of mind.
Top tips to find the right professional indemnity insurance policy
Some of the things to keep in mind when comparing professional indemnity insurance providers include:
– Requirements made by professional bodies or by law
In some professions where professional indemnity insurance is mandatory, the relevant professional body has already set out exactly how much indemnity insurance members should have. This is the case of accountants, who are required to have a policy that is worth at least 2.5 times their gross income, based on the previous year’s figures.
– The level of cover
Companies may offer protection against loss of client data, damage or misplacement of documents, negligence, unintentional breach of intellectual property rights, and unintentional misuse of confidential information, libel, slander, and defamation. However, not all policies cover all of these instances, so it pays off to spend some time making sure that insurers offer the adequate level of protection for every business.
-The policy limitations
When it comes to insurance, limitations or exemptions are almost as important as the level of cover. For example, professionals working in fields like construction or environmental consultancy must remember that this type of insurance does not cover professionals against pollution or environmental claims. In many cases, work that has been carried out abroad or by sub-contractors is not covered either.
Another thing to look out for is whether legal expenses cover is included in the policy or not, and if so, to which level. We all know that legal services come at a high price, and more so in certain types of compensation claims.
– The policy type
Professional indemnity insurance policies come in two forms. In the event of a claim being made, each and every claim policies (also known as any one claim policies) will pay the agreed amount for every claim that is made. On the other hand, aggregate policies consider all claims being made during the period in which the policy is in force as one single claim. In this case, once the maximum amount agreed has been paid out, future claims will not be covered.
Last but not least, it is useful to look for a policy that is specific to each trade, rather than a “generic” one. This will ensure that professionals can carry out their job with complete peace of mind, knowing that their insurers are aware of the specific risks involved and able to cover them to satisfactory levels.
How about you all? Do you carry business insurance for your ventures?
Share your experiences by commenting below!
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