Professional Indemnity Insurance

Arranging Professional Indemnity Insurance

Arranging Professional Indemnity Insurance can be very complex and it's important to get right. Here are just a few things to think about:

Activities to be covered - this might sound simple but it's really important the Business Description on your policy reflects what you actually do, and that this gets updated if you branch out.

Retroactive Date - usually your Professional Indemnity policy will have a Retroactive Date and you will not be covered for any claims made for incidents that occurred before this date. It's really important to get this right as sometimes a new policy from a new provider can have a more recent date, leaving a huge gap in your cover.

Where you do your work  - Professional Indemnity Insurance policies will have a Territorial limit, setting out which part(s) of the World you're covered.  It's important to make sure this matches how you work.

The Courts a claim could be brought in - the Jurisdiction set on a policy will determine what courts the policy will cover you in, so it's worth taking this into account when reviewing any overseas contracts you might be dealing with.

What you need to know about Professional Indemnity Insurance

What many business owners don’t realise is professional indemnity insurance policies are on a ‘claims made’  basis, which means that claims are handled by the insurance company currently covering you when the claim is made, and not your insurer from the time the alleged incident took place. Many claims are made against professionals years after services are complete.

Essentially, this means two really important things:-

1.  It’s important your Professional Indemnity policy remains current and up to date at all times, as it this policy that will protect you if a claim is made for a piece of work you did years ago.

2.  It’s essential you have the correct ‘retroactive date’ on your professional indemnity policy.  The retroactive date is a date in the past   (usually in line with when you first purchased professional indemnity insurance) which is the earliest date in the past that your cover will reach back.  Sometimes, when moving insurers, if not advised otherwise, an insurance company will set the retroactive date to the start of your new policy, meaning you are not covered for any work you did before this date.

Example – XYZ Ltd buys a professional indemnity policy that they renew on the 1st January 2022. The policy has a Retroactive date of 1st January 2012. They are therefore covered for claims made against them after 1st January 2022  for any work that they have done since 1st January 2012.

When reviewing your professional indemnity insurance, its really important to use an experienced business insurance broker who can look out for this and other areas of concern for you.