PROFESSIONAL INDEMNITY EXPLAINED
What limit of indemnity should I buy?
When considering the correct limit for your business you should there are a few areas of consideration. The questions to consider are what is the size of the companies project/total contract value and what is your level of responsibility on the project as a whole? - basically how much could you potentially be sued for! In addition does the limit of indemnity meet your regulatory bodies' requirements or what your clients contractually require you to have?
What is a retroactive date?
The retroactive date sets out how long before the inception of the policy that you will be covered for negligent acts, errors or omissions. Professional indemnity is written on a claim's made basis which means you are covered for claims brought against you during the policy period. For example, if your retroactive date is 01.01.2016 and a claim is made against you during the 2021-2022 policy year for work carried out in 2017, you would be covered. If your retroactive date is stated as 'none', this is the widest form of cover as it effectively means that all past work is covered.
What is the difference between 'any one claim' and 'aggregate' limit of indemnity?
This relates to the level of cover you have and how much money your insurer will pay out in the event of a claim. If you have a £1,000,000 limit of indemnity in the aggregate, this is the maximum amount which your insurer will ever pay for all claims made against you during the policy period. If you exceed this limit, you will have to pay the remainder.
If the basis of the limit is any one claim then regardless of how many claims you make, you have a £1,000,000 limit of indemnity per claim. As you can see, any one claim will give you more protection and there is far less chance of running out of insurance.
What is meant by including / excluding defence costs?
It is always worth checking if the limit of indemnity is inclusive or exclusive of defence costs. If your limit of indemnity states 'excluding defence costs', this means you will not have to pay an excess in relation to any legal defence costs which you may incur. Also if the defence costs exceed the limit of indemnity, they will also be paid in addition.
What do insurers look at when quoting on my professional indemnity insurance?
When assessing the proposal form and calculating the premium insurers will look at a number of different factors. This could include areas of practice i.e. low or high risk, claims history, experience/qualifications, fee income and the types of contracts you are involved in. This includes the total contract value as well as your own fees. Insurers may also want to find out what risk management procedures you have in place as well.
To get the best premiums from insurers, it is important to complete a full proposal as accurately and as easy to read as possible. Additional information with full details of your experience, the services you offer your clients and the procedures you have in place to mitigate your risk will also help your broker negotiate the most competitive premium on your behalf.
Can I increase the limit of indemnity during the policy period?
Yes. You can increase the limit any time during the course of your policy. You will just need to let us know the limit you require and the reason you why you would like to increase it. We will then let you know what the additional premium will is.
Can I get Professional Indemnity if I am new start up business?
Yes. As well as completing a proposal form, insurers may also want to see a copy of your CV, business plan and financial forecasts.