Professional Indemnity insurance is relevant to you, or your organisation, if you provide advice or professional services.

It is also referred to as Professional Liability or Errors & Omissions cover, and can include cover for Breach of Copyright, Libel and Cyber/Data breaches.

This type of cover provides you with a promise to cover the costs of any claim brought by a client or service user against you for financial loss as a result of an error or omission in the advice or service provided by you. Some policies also extend cover to include personal injury caused as a result of your error or omission.

Things you should consider when reviewing your professional indemnity requirements include:

  • Contractual Requirements – whilst you are generally free to choose the level of cover that most suits your risk appetite, usually £250,000, £500,000, £1M or £2M, you may have entered into contracts or agreements which require you to have certain limits of indemnity. Common examples of these include charity grant applications, tender processes, commissioned services, etc.  If you are a regulated firm, your regulator may impose specific limits of indemnity, for example the Solicitors Regulatory Authority usually requires regulated firms to hold £2,000,000 of cover.
  • Basis of cover – Professional Indemnity can provide a limit of indemnity either “in the aggregate” or on an “any one claim” basis. Where the policy provides an “aggregate limit”, this is the most that an insurer will cover in any given policy period (usually a year). If the policy is set up on an “any one claim” basis the limit of indemnity will apply to each claim, irrespective of how many claims are made in the policy period.
  • Claims Made – Professional Indemnity policies are usually on a “claims made” basis. This means that cover is provided for claims brought against the policyholder during the policy period. By contrast, Public Liability policies are usually on a “claims occurring” basis where the insurer at the time the loss/incident occurred will deal with the claim, irrespective of when the claim is brought.  This is particulalry important if you change provider, and the basis of cover changes, or if you are closing your organisation you may wish to consider “run-off” cover against future claims.
  • Retroactive Date – Because Professional Indemnity policies are underwritten on a “Claims Made” basis, insurers are generally only keen to provide cover for work done since a Professional Indemnity policy has been purchased. This means that insurers will ask for a retroactive date. Claims brought against an insured for work done prior to the retroactive date will not be covered. This is one important reason to avoid gaps in cover, as retroactive dates are reset following a break in cover.

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Talbot Jones Ltd is a family-run Chartered Insurance Broker specialising in Third Sector and Professional risks. Get in touch for free insurance advice, review or quotation.