Professional indemnity is an area we’re commonly asked about, which is why we’ve decided to compile answers to the five most frequently asked questions.
To start with a definition, professional indemnity occurs when a client believes that a service or product you supplied them with did not fulfil your duty of care to them. For example, they could believe your service caused injury, resulted in a financial loss, or damaged their property. This can leave you open to a claim, meaning insurance is vital.
However, this is a grey area for many professions, and can cause a lot of confusion!
1. What occupations can professional indemnity cases apply to?
While technically a client could hold anyone providing a product or service to them responsible for a loss, some sectors have a greater risk.
These include the legal, financial and medical professions, as they often deal with people when they’re under extreme duress and are feeling especially vulnerable. As a result, professionals working in these areas are often legally required to have professional indemnity insurance.
2. How much professional indemnity insurance cover do I need?
The amount of professional indemnity cover you require varies based on your unique circumstances. Before deciding upon a cover limit, you and your insurance provider should consider both past and current work to determine the potential cost of damages that you could be held liable for.
When calculating this, you should take into account aspects such as possible property damage, personal injury claims and legal costs for you and for any potential claimants.
3. Can I get professional indemnity insurance cover after a claim has already been made against me?
While professional indemnity insurance is available to all, regardless of claim history, a claim may affect your premium. Additionally, it’s highly unlikely that your new policy will cover previous claims, and so it’s vital that you take out professional indemnity insurance before you begin work in a high risk field.
You should also be careful when changing insurance policies or providers, to ensure that your old policy will continue to protect you against previously made claims.
4. What will the insurance cover exclude?
The insurance covers the majority of issues that arise in relation to providing goods or services to customers. The only real exclusion is if a claim is filed after your insurance policy has expired.
Unfortunately, many don’t realise they need run off cover after retiring or discontinuing their business, to make sure any claims made after this time are dealt with by their insurance company. Likewise, if you change insurance broker, make sure any claims that could be made in relation to work you completed before taking out your new policy are covered.
5. Do I have to pay an excess?
While all insurers require professionals to pay an excess (the amount of money that you agree to pay towards covering the costs of a claim yourself), most will keep this relatively low to prevent you from experiencing financial difficulty.
Before you agree on this amount with your insurer, you should keep in mind that the excess applies to each individual claim, meaning you could potentially face multiple excess payments in a year. If you’d like further information on professional indemnity, contact our team of insurance experts today.
