Professional
indemnity insurance is used by a lot of professional occupations such
as Engineers, architects, brokers, solicitors and financial advisors.
It is used to protect against claims in today's litigious climate
against negligent professional services.
Without
professional indemnity insurance companies and individuals are left
wide open for claims against error's, omissions, professional neglect
and a whole range of liabilities from the services they provide. That
is why it is important for professionals to take out such cover.
Without PI insurance such companies and individuals face the risk of
having to defend against large claims for which they may in fact be
liable.
Naturally
depending on the risk and degree of claims against individuals and
companies there are different professional indemnity insurance
policies which are available. For example, an individual may be of
the opinion that $2 million PI cover will be suitable for the
services he or she provides. However a larger company may be of the
opinion a $20 million PI cover is what is required in order to
mitigate the risks of the services they provide.
Obviously
the larger the professional indemnity insurance cover, the larger the
premium you will need to pay. That is where you will need to evaluate
the risk and reward as to the level of cover which you choose to take
out.
Generally,
the higher the perceived risk of the services you offer to your clients
the larger the amount of professional indemnity insurance you will need
to take out. Therefore in more risky professions you will need to pay a
higher premium in order to cover the perceived risk that you are
subjecting yourself to.
In order
to get PI insurance you will usually go through an insurance broker.
There are literally hundreds of insurance brokers who can set you up
with PI insurance. In most of the cases, the quotes you receive will
be underwritten by a large insurance agency.
Usually
it will be this larger insurance company that will pay out a claim via
the insurance broker that you choose to engage for your PI insurance if
there is a claim against you or your company.
Then
in order of a claim
you will usually go through your insurance agent and be paid out by
the larger underwriting insurance company if your case is accepted by
the assessment panel if you happen to make a claim for insurance.
Going
through a professional indemnity insurance broker or agency can save
you a lot of time because usually they have contact with the large
insurance companies and understand their policies. For example,
different PI insurance policies will cover you for different
circumstances.
Therefore
by being in contact with a broker you are
able to explain your circumstances and what you would like to be
covered for. Then the broker can suggest a PI insurance policy that
is likely to be the best option for your individual circumstances.
Obviously this will save you a considerable amount of time not just in
selecting the right policy but also in handling the paperwork if a
claim is made against you or your company.
Make
note however to review the PI insurance policy before proceeding with
getting cover. The reason for this is you will then be informed as to
exactly what you are covered for if you are unfortunate enough to
have a claim against either you or your company. Plus you will also
understand what exclusions are included within the policy for
circumstances that your insurance policy will not cover you for.
If you
are offering services for which you may get a claim against you it is
critically important that you consider taking out professional
indemnity insurance. There is an upfront premium for the cover however
it can
potentially save you from a crippling financial disaster in the event
of a claim against you.
The
reason for this is that the insurance company will usually cover the
damages against you if the claim is in alignment with their policy and
your case is assessed in favor of you or your company.
Even
the
most respectable companies do have various claims against them over a
period of time from dissatisfied clients. Usually no matter how
diligent, competent and professional the services you offer to your
clients are there is almost always a risk of having a claim made
against you from a dissatisfied client.
That is why it is
critically important to consider taking out professional indemnity
insurance if you feel there is a risk of a claim against you. Not only
will it provide you a level of cover in the unfortunate circumstance of
a claim against you but it will also give you peace of mind when
providing the professional services because you will typically be
underwritten by a large and robust insurance company.