Your clients rely on your advice or services.
But what if your advice orservices lead to losses or an unpleasant outcome?
For example, your tax advice causes them a huge financial loss or your software fails to perform in their mission critical project. Or your advice just turns out to be devastating for their start-up.
You can be sued by your client on the grounds of unprofessional advice, negligence and inadequate service. After all, not all clients are forgiving.
If you are found guilty in court, you are liable to pay the compensation to the client. Even the costs to defend your business against such allegations or claims can be enormous, whether you are guilty or not.
Consequently, you end up with huge financial losses occurred by penalties and legal fees. Even worse, it might be hard to overcome such losses.
This is where professional indemnity insurance comes to rescue.
Professional indemnity insurance may protect you against legal costs and damagesas a result of your business advice or professional services. It may cover the claim made against you for breach of duty, error or omission in the performance of your advice or service or act. However, it doesn’t offer protection against deliberate breaches.
While professional indemnity insurance is downright essential for all professionals, it is important to consider several factors while choosing the one.
Determine How Much Coverage You Need:
You should decide how much PI coverage your business needs. Well, it all depends on your business, your clients, and your potential exposure. Make sure your PI insurer is able to cover most or all of the rectification costs.
Here are some important points to consider whendeciding how much coverage you need:
- Determine the value of the contracts and project you have.
- Assess the cost or loss your projects or contracts CAN cause.
- How much would it cost you in legal fees to defend the case?
- Think about the worst case, and would your business survive such claim.
If your industry has a regulatory body, check the minimum insurance requirement set by such them. For example, the coverage for charted accountants can be different than for business coaches.
Ponder over Insurer’s Specialization:
Not all insurers are the same. Some specialize in pet insurance, medical insurance, health insurance, liability insurance and legal insurance – while other specialise in professional indemnity cover for professionals.
The point is here to choose the company that specializes in insurance you’re looking for. You might also want to get more particular and look for a PI insurance company that offer cover for your specific business, profession or area of expertise.
Consider Your Budget:
Your budget is another key point to consider while opting for PI insurance. The premiums can vary from cover to cover, and from provider to provider.
Choose the plan you can afford without draining up your finances, while providing sufficient cover, as earlier discussed.
Check the Reviews:
Reviews are a great way to determine the quality of any business. You can find reviews about your insurers on their social media page, website and even on the first page of Google. Plus, you can ask your colleagues or others belonging to your line of business which insurers they would recommend.
Tell Your Providers about Any Previous Complains or Claims:
Don’t hide any previous complaints or claims from your insurer. Share information with them as much as possible on any PI claims or previous complaints. This is because they can suggest you the right coverage based on past issues.
So these are some tips to choose professional indemnity insurance for your business or profession. Or ask your insurance broker. What do you think? Let us know by commenting below.
*Important: Cover may be available subject to meeting insurers underwriting criteria. Some of the covers listed may or may not be available or may have limitations or exclusions. Cover inclusions vary significantly from insurer to insurer. DO NOT rely upon the above. Check your policy schedule carefully for inclusions and exclusions and limitations. Talk to a business insurance broker for more information.