Professional Indemnity Insurance

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Who Needs Professional Indemnity Insurance?
The need for Professional Indemnity Insurance is extremely high today. Whether you work in a company, or you are a contractor offering services within your specific professional industry, the client expectations of quality and service are set very high nowadays and you need to display a standard or even above-standard level of knowledge, care and skill.

Basically, a "professional" is anyone who provides specialist advice or services within their sphere of knowledge.

With the increasing number of claims for alleged negligence or breach of duty, it is unwise to go without Professional Indemnity Insurance cover. The cost of defending claims made against you may put your business and personal assets at risk. You need the right type and amount of coverage to protect yourself and your company against losing your valuable assets.

The amount of cover your business may need depends on the type of services it provides, as well as the exposure it faces. When determining the amount of coverage you need to purchase, consider the value of your work for your clients and the potential financial impact your work might have on them should something go wrong. If the professional advice you or your employees give to your clients causes them financial losses, your insurance will cover the cost of the claim. As a general rule, it makes sense to purchase as much cover as you can reasonably afford.

What exactly does a Professional Indemnity policy cover? Generally speaking, it protects from reputation-damaging claims made by dissatisfied clients. Your business could be exposed to negligence or breach of duty, libel and slander, unintentionally infringing on others' intellectual property, such as trademarks, copyrights, loss of documents or data belonging to your clients, dishonesty etc. Buying Professional Indemnity Insurance means protecting yourself against legal liability for an act, error or omission, professional neglect or any of the above-mentioned issues.

Professional Indemnity Insurance operates on a "claims made and notified" basis. It means that for a claim to be accepted by an insurance company, the policy needs to be in force at the time the claim is made and notified. With Professional Indemnity Insurance it is necessary to be covered when a claim is made, which may be different from the time when the mistake is made.

Some professionals may stop buying Professional Indemnity cover once a contract is over, which means that they stay without any cover for past work completed. Even if you plan to cancel your coverage when you retire, for example, somebody could still make a claim against you and you will be unprepared for it.

Remember that your Professional Indemnity insurance policy can cover you for any claims arising out of work you completed in the past. Consider taking out retroactive cover to secure yourself against claims that may arise from previously completed work. Note that sometimes Professional Indemnity claims tend to arise even years after a contract for a particular service has been completed.

More and more often clients themselves will set a minimum limit of indemnity they require before they start working with you. This limit can be set equally for all the service providers they deal with or it can depend on the specific nature of the services you provide.

Make sure the description of your profession is adequately and carefully covered in your Professional Indemnity policy. Note that in case you perform some activities at work which are not listed on your policy schedule, they are most likely to be excluded from cover.

The level of Professional Indemnity cover required varies with the particular activities undertaken by the professional. Much will depend on the circumstances of the particular situation. Double check the terms and conditions of your policy to be aware of what is covered and what is excluded.

Claims Examples

1. A back-up generator installed in a very large home failed to work as specified and eventually had to be replaced by the main contractor. The main contractor claimed the reasons for the non performance was a design error and issued a claim against the supplier who had indeed built the generator but subcontracted the work for its design out. The design engineer’s Insurers assisted in successfully defending the claim.
2. An Insured installed and designed plant and machinery in a new school, there were numerous defects alleged after completion of the school which cumulated in the whole school being relocated into temporary accommodation for 6 months. Although the contract value to our Insured was less than £10,000 the sum total of all the defects claimed for and the relocation costs were £4 million. The Insured had in fact sub contracted out the design to another firm however the claim was not notified to our Insured until several years later by which time the firm who did the design work had gone out of business and their insurance lapsed. We paid for our Insured’s defence in negotiating with the claimant’s solicitors who sought a global settlement from the main and all sub contractors however small their actual involvement.
3. An Insured manufactured an overhead canopy for a new hospital. It was not installed properly on site and the main contractor claimed against our Insured claiming faulty design as the reason the canopy could not be installed correctly. As a result of the installation being incorrect many other parts had to be re-machined and re-installed. The Insured was defended and an eventual settlement reached.
4. An engineer was asked to design a heating system for a large hotel reception room. The installed radiators did not heat the area sufficiently and therefore the system had to be removed and redesigned.
5. A civil engineer involved in the design of a car park did not make provision for adequate drainage, causing the car park to flood and rendering it useless. A claim was brought for the cost of rectification.
6. An interior designer undertook design and decoration of a substantial property that included a detailed specification of lighting features. It was alleged that the correct specification had not been followed and that the lighting was not of the required standard. A claim was made for the cost of making good the lighting installation.
7. I T consultants installed an integrated computer, electronics and entertainment system in a yacht. The design and configuration of the system created an internet connection that was open permanently, running up significant costs as a result.
8. Errors in the design of a garden led to problems with a property’s drainage. A claim was made for the costs of rectifying the problem.
9. Consulting engineers were found to be negligent in their design of waste heating boilers. A claim for £4 Million was brought for the cost of extra work and the resulting delays.
10. Fuel economy consultants were allegedly negligent in their design of heating and lighting for a factory. Substantial remedial work was required, resulting in a claim for £600,000.
11. A client alleged that the design of a furnace by a mechanical engineer was negligent, amount paid £255,000.
12. The design of a machine proved inadequate to cope with the weight of items being produced – amount paid £15,000.

Why choose L. F. E. Insurance for your Professional Indemnity Insurance?

• Independent impartial advice and quotations
• Competitive premiums from a wide range of leading insurers
• Cover can be tailored to your needs
• Monthly payment facility
• Independent advice and help on you claims

Ring us today on 0116 284 6090 for independent impartial advice and a quotation on your professional indemnity insurance
Or click here for a quotation.

Professional_Indemnity_Leaflet.pdf

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