Having professional indemnity insurance (PII) in place is a legal requirement for accountants, but it’s more than just a tick-box exercise – careful consideration is needed when selecting a policy that’s right for the work that you do. However, finding the right cover at the right price is becoming increasingly difficult due to the challenging PII market we’re currently experiencing. Fewer insurers are operating in this market, premiums are rising and higher risk work, such as probate and tax, are getting harder to cover.
So, what does this mean for you and what do you need to consider when next reviewing your PII?
1. Make sure you have the right level of PII in place
Not all PII is made the same. 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 PII policies are lower as a result.
Consider the breadth 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.
2. Use a professional indemnity insurance broker
If you need professional indemnity insurance, then you’re going to need an insurance broker. A broker provides advice and explains clearly what your insurance covers and what is not covered.
They also act for the customer and have a legal duty of care in the advice and products provided. Using a broker can help you to avoid duplication of cover and paying twice, as well as making sure that you are not paying for more cover than you need.
They can also carefully shop around on your behalf, using their insurer relationships to help find you the cover you need at the best possible price - an invaluable service in the current climate. Don’t forget to leave plenty of time to renew your insurance, as securing the terms you need may take longer than usual in the current climate.
3. Time to expand your services? Time to check your PII policy
If you are thinking about broadening the range of financial services you offer to your clients, then it’s vital to check your PII policy and make sure that it adequately meets your changing needs.
Offering financial advice or probate services, for example, carry a higher level of risk, which will further impact the premium you pay. If you fail to update your policy, your insurer may be unable to indemnify you in the event of a claim.
Having the right level of PII enables you to work confidently in the knowledge that your practice is covered. Using a specialist PII broker can help you manage this process and give you peace of mind that your business is protected.