Professional Indemnity insurance offers protection from damages arising from the provision of, or failure to provide, professional services.
As a perceived expert in your field, the law dictates that you have a heightened duty of care for both the advice and professional services you provide.
What Type of Occupation Needs Professional Liability Insurance?
Professional indemnity insurance, also referred to as errors and omissions, protects professional personnel against negligence claims made by a client or third-party.
Professionals who commonly turn to this type of liability insurance for cover include traditional trades such as Architects, Surveyors, Engineers, Solicitors, Estate Agents, Medical Professionals and Accountants.
Alongside these established occupations, recent years has seen significant growth in freelancing and consultancy based professions, all of whom also are at risk of professional liability claims, such as IT Consultants, Business or Management Consultants, Trainers, Web Developers, Marketing or Advertising Executives or Publishers.
What Are The Key Considerations?
The need for professional liability cover developed due to typical Public Liability Insurance policies only responding to bodily injury, property damage, personal injury or an advertising injury claim.
Because professionals such as architects, solicitors, accountants, estate agents, technology consultants and others can cause claims relating to financial losses, additional cover is needed to fill this gap.
Common claims made on these policies include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.
For example, if a Web Designer develops an e-commerce portal which fails to perform correctly, it would not cause bodily injury or property damage.
Because of this, a typical public liability policy would not respond to a claim. But because the Web site design did not perform correctly, it could directly cause financial losses.
It may be attributed to a misrepresentation of the site capabilities or professional negligence, under these circumstances professional liability cover would provide indemnity for your business.
What Exactly Does Your Business Need?
When buying PI cover, some considerations will help you determine precisely what you need.
- Are the policy wording and cover broad enough to capture all of the current and future work of the business? Determine if the policy covers the scope of your organisation’s professional tasks and services by reading the definition of the covered services in the policy. One of Insync’s expert Gurus can help you determine if all professional tasks would be covered under the operative definition or if additional clauses would need to be added.
- What if there is a sale, merger or acquisition? There are many potential changes which can impact your requirements and risk profile. If you are acquiring another business, are you liable for previous advice or services delivered by that business?
- Are there any exclusions? Look at the list of policy exclusions carefully, particularly if you are purchasing online without the benefit of expert advice and support. Review the list to make sure it does not preclude cover for any professional services or tasks that you need covered.
- Is an extended reporting period an option under the policy? These provisions offer extensions of time to report claims that would otherwise fall outside the policy period – as long as the act/omission resulting in the claim occurred during the policy period. Find out what extended reporting period options are available and discuss how much time the policyholder may need to report a claim.
- Can you create a bespoke policy? Common additional covers include Cyber Liability and/or Data Breach and Contract Specific extensions.
- Have there been any past tasks or activities at your business that could potentially result in a claim? Have there been previous instances where a claim was filed? What was the result? Discussing the specifics with your broker can help to determine your exact cover specifications and how to protect your business for the future.
How to Protect Your Business
- Establish a high standard for product and service quality control at your company.
- Develop a robust set of Terms and Conditions and ensure that your client is fully aware of your, and their own, roles and responsibilities.
- Keep all company records are up-to-date and accurate.
- Train employees thoroughly while keeping accurate records.
- Ask Insync or your Insurer Advisor for safety and compliance risk management information.
FREE Business Insurance Review
The risks and exposures for professional businesses will continue to grow, and Insync Insurance is a specialist in all types of business insurance cover, including Professional Indemnity Insurance and Cyber Liability exposures.
You can request a quote online, or alternatively, why not book a free review with one of our expert Gurus at a time that suits YOUR diary.