Professional Indemnity (PI) Insurance
While we hold everyone to account and expect tradespeople and service sector personnel to deliver a professional service, we expect those in the professions to provide us with much more. All of those in the traditional ‘professions’ (doctors, solicitors, accountants, and architects) are also held to account legally, most often through membership of an official regulatory body.
However, as our world changes, a new group of professions are emerging, from cybersecurity experts and IT consultants to management consultants and ‘trouble-shooters’. These new professionals are also expected to provide clients and customers with accountable and quantifiable levels of service.
When those standards are not met, professionals can often find themselves challenged in the courts, especially if their actions or advice has caused a client to lose financially. This is where professional indemnity insurance comes in.
Who needs Professional Indemnity (PI) Insurance?
Anyone who gives advice for a living should have Professional Indemnity. That includes designing solutions (for example, a cybersecurity system) or representing the needs of others (such as estate agents).
For some professions, Professional Indemnity (PI) insurance is either a legal requirement (such as those in the legal industry according to the Solicitors Act 1974), or is a regulatory requirement. In some cases, professional bodies and organisations will not allow an individual to practice if they do not have Professional Indemnity (PI), even if they are fully qualified to offer the service to clients.
Some clients will not agree to work with a professional unless they have Professional Indemnity (PI) insurance, for example, an architect working on plans for a private house or commercial building.
At Business Insurance Service, we strongly recommend that anyone in a professional role should take out Professional Indemnity (PI) cover, as the financial cost of a claim (including the legal costs) can be catastrophic to an uninsured business or individual.
What is Professional Indemnity (PI) Insurance?
Professional Indemnity (often referred to as PI or PII) insurance provides those in professional occupations with a financial safeguard against losses in the event of legal action brought for negligence, error or omission, financial loss, breach of contract, slander, and libel. It provides protection for service errors, contract performance disputes (where the client claims a contract has not been fulfilled as agreed or has been breached) or any other liability issues or claims.
Professional Indemnity (PI) policies usually have a claim limit and an annual limit, based on the level of exposure a person is subject to, and how often claims could potentially be brought in the course of a year. The claim limit is the maximum amount paid out by the insurance provider for any single claim, and the annual limit (aggregate basis) is the maximum that can be paid out in any one year.
When you’re choosing your PI cover, it’s important to check both the claim limit (any one claim basis) and the annual limit amounts (aggregate basis), as well as what extensions are included (such as loss of documentation and staff disruption costs).
In the aggregate Vs. Any one claim – What’s the difference between the two?
What is an aggregate basis?
If a policy contains an ‘in the aggregate’ indemnity limit, you can make multiple claims on it, up to the indemnity limit. Once you reach the limit, you cannot claim again during that policy term. It means that theoretically, you could run out of cover before the policy term ends.
‘In the aggregate’ cover may cause you an issue if you are a large business that has greater risk exposure or would prefer more comprehensive protection. It is likely to be sufficient for small to medium-sized or low-risk enterprises.
What is an any one claim basis?
With a Professional Indemnity policy that pays out on an ‘any one claim’ basis, for each and every claim you make, you are entitled to the full indemnity limit. So, for example, if you make two claims on a policy, you can make a claim up to 100% of the indemnity limit for each claim.
Your Professional Indemnity insurance will cover your business for many different scenarios, including defamation, intellectual property infringement, data or document loss and negligent misrepresentation or misstatement. However, it’s worth remembering that no matter which type of cover you have, your insurer may refuse to cover any claim made because you’ve been reckless.
Is there a one-size-fits-all professional indemnity insurance package?
Because there are very different challenges faced by professionals from different fields, no single PI policy can provide universal coverage for everyone. That is why it’s so important to talk things through with an experienced, professional broker who understands both your profession, the challenges you face, and the specific type of professional indemnity cover that works for you.
At Business Insurance Services, our brokers work with you to find the most effective policies from some of the UK’s largest insurance providers, including Lloyds of London. We’re experienced in helping both sole traders and individuals, right up to large corporations and multi-national operations. From family firms to globally recognised operations, we can help professionals in all walks of life to protect their assets, their finances, and their reputations.
What is not covered on a PI insurance policy?
Professional Indemnity insurance does have exclusions (as with any type of insurance), including intentional, dishonest, or fraudulent acts, or non-financial losses. To make sure your PI cover includes everything you need, talk to your broker before making a final decision.
Please contact us should you require templates for your general risk assessments and equipment security checklists, or any other support with your risk management documents.
How Business Insurance Service can help professionals
We work with some of the largest policy providers in the UK, including market leading insurers like Aviva, Allianz, Chubb and AXA. We can also broker higher risk and non-standard specialist insurance policies via accessing the Lloyds of London insurance market, making us the broker of choice for larger and more complex businesses who require expert brokerage and a personalised service.
We make sure you get the best deals too, we don’t just necessarily give you one quotation, we can arrange a selection of options for you from our panel of specialist insurers. You can choose the right one for you, putting you back in control of your financial decisions.