Top 3 considerations when next reviewing your Professional Indemnity Insurance
If you are thinking about broadening the range of financial services you offer to your clients, it’s vital to check your Professional Indemnity Insurance (PII) policy adequately meets your changing needs. Offering financial advice or probate services, for example, carry a higher level of risk which will impact the premium you pay. If you fail to update your policy the insurer may be unable to indemnify you in the event of a claim.
Having the right level of PII therefore enables you to work confidently in the knowledge that your business is covered. This checklist identifies the key considerations when managing your PII:
Remember, not all PII policies are the same
Having PII in place is a legal requirement for accountants, but it’s more than just a tick-box exercise when selecting the policy that’s right for your needs. While most policies may appear the same on the surface, there are two distinct types of cover:
A) Civil liability
Provides specialist cover for all civil liabilities (unless specifically excluded) arising from the provision of professional services such as breach of statutory duty, libel and slander and breach of intellectual property rights.
B) Negligence only
Designed to only cover negligent acts, errors or omissions. The price of negligence only PI policies are lower as a result.
Consider the breath and amount of cover you need
The level of cover that you require will be determined by a number of factors, including:
- Contractual obligations - Many contracts now stipulate that you carry a certain level of professional indemnity insurance and that you do so for a certain period of time after the contract has ended.
- Value of your contracts - This should be a consideration when deciding on the limit of indemnity required. Consider the worst case scenario if you were to make a mistake and a claim for financial redress is made against you.
- Cost - The cost of the policy is ultimately going to be a deciding factor when weighing up what your business can afford against the cover available.
Use a broker
PII is a specialist insurance, so it’s important to find a broker that specialises in this field. As part of their service, a broker will:
- know the right insurers to approach and how to present your business
- give advice and also explain clearly what is and what is not covered. A broker acts for the customer and has a legal duty of care in the advice and products provided
- use their expert knowledge to highlight areas of cover that may not have been considered
- ensure that you are not paying for more cover than you require and ensure you receive excellent service
- continue performing valuable day-to-day services, monitoring the adequacy of coverage limits and policy terms as market conditions fluctuate
- act on the businesses’ behalf to achieve settlement in the event of a claim.