Professional Indemnity Insurance
Professional Indemnity Insurance
Historically professional indemnity insurance, or Errors and Omissions insurance, has been aimed at the, architects, solicitors, surveyors, accountants, and insurance sectors, In recent years new professions such as e-commerce, programmers internet service providers and emerging industries based around the Internet of Things (IOT) as well as experienced and highly qualified experts setting up a variety of Business and Management Consultancies found that Professional Indemnity Insurance is an essential part any business risk management strategy.
IS THERE A DIFFERENCE BETWEEN PROFESSIONAL INDEMNITY INSURANCE AND ERRORS AND OMISSIONS INSURANCE?
Not really as the both cover the same type of risk based on your ability to provide advice or service in a professional capacity. Errors and Omissions (E&O) is an American expression for the same type of cover referred to as Professional Indemnity Insurance in the UK and Ireland.
WHAT’S COVERED BY PROFESSIONAL INDEMNITY INSURANCE?
Professional Indemnity Insurance protects against claims for "Business Injury", which means any financial loss that claimants suffer as a result of:
- Any negligent act, error or omission.
- Implied Statutory Terms(e.g. Sale of Goods Act 1979, Sale of Goods and Services Act 1982 and other similar legislation as well as Common Law).
- Unintentional Infringement of Intellectual Property Rights.
- Loss of Documents/Data entrusted to the insured.
- Unintentional libel, slander, defamation.
- Unintentional breach of confidence, confidential duty or misuse of information.
Professional Indemnity Insurance will pay all reasonable costs incurred in the defence (e.g. legal fees) or settlement of such claims arising from the above.
WHO NEEDS PROFESSIONAL INDEMNITY INSURANCE?
Professional Indemnity Insurance is compulsory for solicitors, accountants, insurance brokers and financial advisors. Professional Indemnity Insurance should be considered as an essential insurance cover for any individual or business who provides advice to others who rely on that advise.
PROFESSIONAL INDEMNITY CLAIMS EXAMPLES
The following examples highlight the importance of Professional Indemnity Insurance:
STRUCTURAL DESIGN ERRORS LEAD TO £110,000 CLAIM
Detailers prepared structural drawings for the erection of steelwork. It was subsequently alleged that the drawings contained errors and £110,000 was claimed for the cost of alteration and the resulting delays in construction.
TRADE NAME ADVICE COSTS AGENT £20,000
After consulting with company registration agents, a business was told that they could trade under a particular name. Following the business launch proceedings were issued by a company with a similar name and £20,000 was paid in compensation by the agents.
DEFECTIVE RENT REVIEW NOTICE COSTS ESTATE AGENT £50,000
An estate agent who missed the opportunity to carry out a rent review because of a defective rent review notice. The claim was settled for £50,000.
CONSULTANTS DESIGN ERROR LEADS TO CLAIM OF £600,000
Fuel economy consultants were allegedly negligent in their design of heating and lighting for a factory. Substantial remedial work was required, resulting in a claim for £600,000.
£4,000,000 CLAIMED FROM ENGINEERING CONSULTANTS
Consulting engineers were found to be negligent in their design of waste heating boilers. A claim for £4 million was brought for the cost of extra work and the resulting delays.
Why choose Cover4Insurance for your Business Insurance?
Instant cover available.
Pay as you go cover - via our rolling monthly contracts with Optional covers available as the business grows.
Tailor the policy to your individual business needs with covers such as Professional Indemnity with Optional covers available as the business grows such as Home Office, Public Liability Insurance and Employers Liability Insurance.
Professional Indemnity Insurance F.A.Q's
Professional indemnity insurance (Professional Indemnity Insurance) is liability insurance that covers businesses in the event that a third party claims to have suffered a loss as a result of professional negligence.
The Financial Conduct Authority Recomends:
- Specified minimum levels of indemnity for both a single claim and aggregate claims per annum.
- For IMD firms, the minimum limits of cover (set out in Euros) must be met at the date of taking out the policy and the date of renewal.
- Continuous cover since the start of your firm’s authorisation. The policy does not contain a specified start date which excludes business conducted after the firm was authorised but prior to the specified start date (which is called a retroactive start date).
- A policy excess (retention) that is no higher than the minimum level specified.
- Cover in respect of Ombudsman awards made against the firm.
- The policy details are reported correctly on the Retail Mediation Activities Return (RMAR), which is the relevant FCA regulatory report.
- It provides additional financial resources from which firms can pay justified claims.
- It helps to prevent insolvency and excessive claims on the Financial Services Compensation Scheme, which is funded by firms that are still trading.
- For insurance intermediaries, it is required by the Insurance Mediation Directive (IMD).
We are a broker for Professional Indemnity Insurance and have access to a panel of insurers, to ensure you get the best possible cover for your business.
To get a Professional Indemnity Insurance quote, please fill in the brief form found below, and we will contact you.
Insurers assess risks differently but often look at four areas of an authorised firm's business when calculating the premium:
- the total income;
- the required limit of indemnity & level of excess;
- the risk profile of the business;
- the type of business.
It is good practice, that firms should notify their insurer, of a potential claim, at their earliest opportunity. Firms should check the terms and conditions of their individual insurance policy for specific information on their insurer's notification requirements, especially if failure to notify (or late notification) causes adverse repercussions such as withdrawal of insurance cover.