…made against you by clients or third parties as a result of negligent or alleged negligent services or advice you provide.
As today’s business environment is much more litigious than it used to be, even the most established businesses can find themselves in a reputation-damaging dispute with a client over a mistake. Claims can still be brought against you even if you do not accept you have been negligent.
Annual premiums can start from as low as £ 50.00 for an occupation considered low-risk but considerably more for large high risk businesses. Premiums vary significantly between occupations. For example an advertising agency will pay a lower premium compared to a solicitor or similar size, as they are very different risks.
There are many insurance companies actively providing this insurance cover in the UK so it’s a highly competitive market and you need a good broker to find you the best deal.
Professional indemnity premiums are calculated using a range of important risk factors which will typically include:
Low risk occupations with small turnover can usually buy cover quickly and easily online. Higher risk and larger firms will be underwritten individually and will complete a proposal form which an Underwriter will consider in detail. They will also look at the firm’s website or they may even look deeper online into a firm’s background.
There are no formal statistics about the size of the market and estimates vary between sources. We estimate that the UK professional indemnity insurance market is worth around £ 2 billion in annual premiums.
The internet has now made this class of insurance very accessible and affordable. An estimated 500,000 small businesses / freelancers now purchase their PI insurance online, although buying PI online is certainly not suitable for every business.
More complex professions and larger firms need to source and buy their PI insurance using the services of a broker. If you need a broker service we are available on 01934 710144 or send us a message.
Here is a list of some of the risks which may be covered by a professional indemnity policy:
Professional indemnity insurance will also pay the legal costs incurred in the defence and settlement of claims.
Professional indemnity cover is usually offered on a ‘claims-made’ basis. This means that your insurer will only cover you for claims that are brought against you DURING the term of your policy. If a claim is made against you after your policy has expired – even if the incident occurred while your policy was in place – you will not be covered for that claim.
For example, if an incident occurred in 2014 when you had professional indemnity cover, but the client brings a claim against you in 2015 – after your policy has expired – you will not be insured for that claim. A policy must always be in force for a claim to be met by an insurer.
Any profession or occupation providing a service or advice can make a costly mistake. Resulting negligence claims range in size from relatively small amounts, to high level litigation between major companies which can run to billions. We’ve selected just a few examples.
Anyone who provides advice, designs or offers a professional service will need PI insurance cover. There are now over 500 different occupations buying this insurance and a few examples are shown below.
Many professions such as solicitors, architects, accountants, financial advisers, surveyors are required to have PI insurance as a regulatory requirement.
This guidance note is intended for information purposes only. It is not and does not purport to be legal or accountancy advice. Whilst all care has been taken to ensure the accuracy of the guidance note it is not to be regarded as a substitute for specific advice. This guidance note shall not be reproduced in any form without our prior permission. © 2019. All copyright is owned by Professional Indemnity Insurance Brokers Ltd