Professional Indemnity

Design and Advice insurance

If others rely on your expertise they are likely to make a claim if something goes wrong. Professional Indemnity protects you and your business from any claims made by a client or third party relating to design or advice given.

Defending a claim for errors and omissions in design or advice can be expensive and awards against you will be even more, so it makes sense to have quality insurers behind you to pick up the bills.

Civil liability = “All Risks” insurance for PI

Policy wordings vary with some operative clauses being quite basic and others quite extensive. An “All Risks” wording will cover claims from a wider range of areas so a civil liability wording is best.

Any One Claim (AOC) or Aggregate limit?

Insurers will not give any one claim wordings to some trades but restrict the limit of indemnity to the aggregate of all claims over the period of insurance. It is possible to add an automatic reinstatement of loss clause to reinstate the full limit of indemnity after a first claim to give some peace of mind.

Who should buy Professional Indemnity insurance?

This cover used to be expensive and restricted to the main professions of lawyers, accountants and the like. It is now seen as reasonable that consumers should be able to rely on the professional advice given by firms and it is so easy to sue firms that PI cover is far more extensively taken.

How to buy PI cover

For a simple straightforward business we can provide a quote over the telephone and arrange cover very quickly. More complex businesses will benefit from completing a proposal form to provide us with greater detail about their needs. Call us on 01243 887770.

Claims Made basis of cover

As soon as a firm discovers it has made a mistake that is likely to lead to a claim being made against it the insurers should be notified. This applies even if the claimant has no idea that a mistake has been made.
The claim will be dealt with under the policy that is in force at the time that either the discovery of an error is made or a claim is made. It does not matter when the error was made.
This is why professional indemnity insurance needs to be continued for run-off cover for several years after trading has stopped.

Directors & Officers insurance is also on a claims made basis.

What is the premium based on?

Turnover is the main element that decides the level of premium. Professional Indemnity insurers always use the sales figure from the latest complete financial year to ensure there is a definite value.
Other variables will be the trade or profession, size and nature of contract and claims history.

What is a Retroactive date?

Any circumstances happening before the retroactive date would not be included in the cover. This date is usually the inception date of the policy or of the first day of continuous cover being in force. It is sometimes possible to pay an additional premium to backdate cover, perhaps to the date the business first started trading.

What is the legal decision about notification of circumstances?

The decision in HLB Kidsons v Lloyd’s Underwriters highlights the importance of giving a full and fair presentation of what is known when notifying circumstances to insurers and making that notification in good time.

There are legal protocols applying to all professional negligence claims which impose time constraints and procedural rules as to how claims should be dealt with.

See our Claims and Claim Circumstances guidance note for more detail.