What is Professional Indemnity Insurance and what are the benefits?

By Roger Crowther, Managing Director at The PI Desk

In general terms, PI Policies will cover you for claims arising from any errors, omissions or negligence from the work that you have conducted provided that there is a PI policy in force at the time the complaint is received by you. In addition, in order for any notified claim to be ‘eligible’ for cover, insurers must be notified of the claim in accordance with the policy terms and conditions. 

Your PI cover will normally:

• Meet your legal, regulatory or trade body/association requirements
• Help you comply with any contractual obligations
• Defend your business against costly claims brought about by allegations of unprofessional conduct, poor service, negligence, errors and/or omissions (whether such allegations have any substance or not)  
• Pay any compensation to your client that is awarded by the arbitrators or the courts, but only up to the level of indemnity selected
• Pay for any legal costs incurred in defending a claim
• Support you with expert legal advice and representation where necessary
• Give confidence to clients that you run your business professionally and that your professional reputation is important to you.

Applying for PI and the correct level of cover can be something of a challenge for both the applicant and the insurer. 

The main objections from applicants are “why do I have to have PI insurance – I will never have a claim” or “why do I have to complete a proposal form” or “I will only take the minimum cover available”. The quick answers are – firms do have claims and you have to complete a proposal form to provide insurers with an understanding of the business and the risk presented to them which will help dictate the level of cover required.

The main problems for insurers are poorly completed proposal forms, receiving forms the day before renewal, unsigned/undated forms and the applicant ignoring queries. These problems mean that insurers are not able to properly underwrite the case. In some cases, insurers receive the same unusable miscellaneous trade proposal form from several different insurance brokers which just causes issues throughout the underwriting process. 

What do we do to minimise problems, delays and objections?  We work directly with organisations like FIBA adding value to the membership proposition by offering discounted premiums which help underpin the relationship.

In order to gather the information we need to underwrite the submission we use a proposal form specific to the firm’s business type which asks questions using terms the member would be familiar with. This form will ask about turnover, split of business activities, previous insurance and past complaints/claims experience.  This information is critical and is an important part of the process. Therefore, the form should be fully completed, signed and dated with no fields being left blank. Any other information that insurers should be made aware of can always be added to the back of the form.

In summary, working closely together is key and by submitting a detailed presentation insurers will understand your business, turn your quotations round quickly, give you the best premium outcome and help build a long term working relationship. Please feel free to contact The PI Desk if you have any questions.