Professional Indemnity

If you provide advice, tuition, design or a professional service to your customers in all likelihood professional indemnity (also known as professional liability) will be perceived as a key cover for your business.

It should be the motivation of every business to be professional and strive for perfection, however mistakes can happen. If such an error or omission causes a financial loss to a third party Professional Indemnity is designed to protect your business.

Professional Indemnity Insurance

As well as covering your business from the costs of a claim made against you, if a mistake is identified by your company insurers can be notified and funds released to help rectify the error. With the correct insurance in place the reputation of your business can be protected and not damaged any further.

Traditionally this cover has been sought by consultants, designers and advisers but with the development of new technology and enhanced contractual requirements many new trades may need professional indemnity cover. Beit IT Contractors, website designers or even manual trades such as plumbers and electricians we have a depth of experience and an extensive access to all leading professional indemnity insurance markets to deliver the right policy for your business.

What does it cover?

A standard Professional Indemnity policy is designed to act in these instances
Professional negligence, such as making a mistake in a piece of work for a client, or giving them poor advice
Unintentional breach of confidentiality and/or copyright
Defamation and libel
Loss of documents or data
Loss of money or goods (for which you are responsible)

What cover is provided?

Costs covered by the insurers include, legal costs in defending any claim and any amounts due to the third party. Some professional indemnity policies can extend to deliver additional expertise such as managing public relations and crisis containment services.

Claims Made

Unlike typical Public and Employers Liability policies Professional Indemnity is written on a “claims made” basis. This means cover is provided for claims which are made and notified to the insurer during the period of insurance.

Therefore providing the error or omission occurs during the period of insurance covered by the policy and it is reported to the insurer during this period, it will be covered. Should the insurance policy expire and the claim reported after this time, despite the error or omission falling in the period of insurance as the notification of the claim was made outside of it the claim would not be covered.

It is important therefore to maintain continuous cover for professional indemnity policies as claims can be made after contracts are completed or indeed following closure of a business. This type of cover is called “run off cover.”

Retroactive Date

A retroactive date means that a Professional Indemnity policy can provide cover for work you have done in the past. There are two dates that are relevant for a Professional Indemnity policy. The first is the inception date (or renewal date) of the policy. This is the start date of the policy period. The second is the retroactive date, being the date that cover operates back to.

Run Off Cover

As the policy is issued on a “claims made basis” it is recommended, if not essential, that companies continue professional indemnity cover even after the business is no longer trading or undertaking with work that may have required taking out such cover. Run off cover will protect the company should claims be notified after the business has ceased trading. For many trades such as accountants, architects and solicitors it is recommended this run off period is at least 6 years.

Any One Claim – Aggregate Basis

Professional indemnity is arranged in two ways and is important in the settlement of large claims or a series of claims. Settlement in the “aggregate” means claims collectively are paid up to the indemnity limit and total claims cannot exceed this amount. On an “any one claim” basis the policyholder is entitled to the full indemnity limit for each and every claim.

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