What Is Professional Indemnity Insurance?
Professional indemnity (PI) insurance is a commercial policy designed to protect business owners, freelancers and the self-employed.
If you are alleged to have provided inadequate advice, services or design to a client, professional indemnity insurance provides cover for the legal costs and expenses in defending the claim, as well as compensation payable to your client to rectify the mistake if you are found liable.
How Does It Work?
Professional Indemnity Policies are written on a Claims Made Basis, meaning that unlike most other insurances, historical work is covered back to a Retroactive Date. This could be all of the way back to the date the company was established, the start date of a contract or the insurance commencement date.
There are also policies available that offer a retroactive date of ‘None’. This negates the need for a set date but will cover only as far back as the company establishment date. Retroactive cover will be subject to continuous cover being in force from the Retroactive Date to the date of a claim.
It is important to note that a policy in force at the time that a possible claim is discovered will look to deal with any claim, even when the incident/issue occurred in the past. If there is no cover in place at the date of discovery the previous insurers from previous years will not pick up the claim. As such, it is essential that Professional Indemnity insurance is continuously in place, with no gaps, for the entire period that you could be open to a claim being put forward.
Do I Need Professional Indemnity Insurance?
If you can relate to any of the below scenarios, we would very much recommend thinking about having a Professional Indemnity Insurance in place:
| The company provides advice or professional services | Recommended ✔
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| The company provides clients with designs | Recommended ✔
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| The company wants to protect against allegations of mistakes or negligence in work undertaken for its clients | Recommended ✔
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| A client of the company has requested the company hold Professional Indemnity cover in order to undertake a contract | Recommended ✔
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| The company is in an industry, association or regulatory body that as part of membership, requires Professional Indemnity Cover | Recommended ✔
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Limits of indemnity can be tailored to a company’s needs, once chosen the limits are written on one of the following two basis:
Any One Claim
Each claim will have a limit of its own, set at the limit of indemnity.
Aggregate Limit
Each claim will come out of the limit of indemnity until that limit is exhausted.
To find out more about Professional Indemnity Insurance or to talk about our other commercial insurance options, please get in touch by giving us a call on 01403 785775 or by sending us an email at info@omnidavis.co.uk. We would be more than happy to help assist you.
