Are you wondering if you need professional indemnity insurance for your business? As all business owners know, it is essential to find the right insurance policies to adequately cover your company.
But there are many insurance policies from numerous insurance companies, and these policies cover a range of different situations. Choosing the right policy can often become all too complicated and time-consuming.
Professional indemnity insurance is one of the most common insurance policies available. It is particularly important for advisory service companies and growing businesses.
What Is Professional Indemnity Insurance?
The right professional indemnity insurance will provide an adequate level of coverage for your business and protect it should people bring any claims against it.
These claims are usually the result of you or your employees being negligent and causing a client monetary loss. Professional indemnity insurance can cover your principals, partners, and employees in the event of someone bringing a case against them on an individual basis.
What’s Usually Covered:
- Breaches of confidentiality
- Breach of your duty of care
- Conflicts of interest
- Civil liabilities
*Please note: this is general information only. Not all professional indemnity insurance policies will provide coverage for all areas mentioned above. To find out what your professional indemnity insurance policy covers, speak to your insurance policy provider. It is also important, when finding the right policy for your business, to pay attention to what your policy might be excluding.
Here are some of the most important pointers to keep in mind when searching for the right policy.
Vital for Businesses That Provide Advisory Services
If you’re self-employed or run a small business that provides advice as one of your service offerings, professional indemnity insurance is vital. In fact, certain companies will opt not to deal with you or your business unless you have adequate coverage.
Some of the most common businesses that should take out a professional indemnity insurance policy include:
- IT providers
- Financial advisors
- Healthcare professionals
In some industries, including a few of those mentioned above, the regulating body might require a minimum level of coverage.
This level of coverage will depend on your industry, the nature of the advice you are giving, the size of the business, and projected budgets of your projects.
Essential for Small and Growing Businesses
While a business is growing, companies often do not understand the risk of negligence, breaches, and conflict.
This ignorance can leave employees blind to potential shortfalls and end in large claims against the business. Taking out a policy will protect you while assuring your clients of your authenticity and that you have appropriate coverage.
Speak to a Broker
A good broker will take the time to gain a solid understanding of your business before assisting you in securing the most suitable coverage for your business.
And he or she will often secure this insurance at the best price. Brokers have experience in dealing with a range of insurance policy providers and will talk you through the ins and outs of professional indemnity insurance.
Here are the pitfalls you need to keep in mind as you search for a professional indemnity insurance policy.
Not Having Adequate Coverage
Even if you’ve covered everything in your professional indemnity insurance policy, it might not adequately protect your business.
The level of coverage you and your business require will depend heavily on your industry and the type of advice you provide.
When researching your insurance coverage, assess what claims people could bring against your company and what these claims could potentially cost you.
Claims Are Often Unexpected
You might have the best systems in place and train your staff to the highest level. But the possibility of someone bringing a claim against your business still exists.
Claims are often unexpected. They can result in serious repercussions for your business and, in extreme situations, can even cause you to cease trading.
Paying Too Much
It’s important to spend ample time researching the market. Evaluate quotes from different insurance policy providers and compare them to what the policy covers.
Also, take note of any policies that are far cheaper than others because these less expensive policies might exclude coverage of essential aspects of your business.
That being said, insurance is very technical and it can be difficult to compare different products. It is insurance that protects you when someone takes legal action against you and your reputation is at risk.
The last thing you want at that time is the cheapest possible insurance. An insurance broker specialist will be able to present you with the best options for your needs.
Claims Brought Against You After Closing
If your business ceases to trade or you’re self-employed but are now retiring, previous clients and customers can still take claims against you to hold you accountable.
You might need to keep your professional indemnity insurance policy active even after closing shop. Because you are no longer receiving an income from your business, doing so can be very costly and sometimes unrealistic.
You might want to take out a runoff insurance policy. This type of policy will protect you against claims for incidents that occurred while you were trading, but which people are only bringing against you or your company after your original policy expires.
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