Professional indemnity or PI insurance is designed to cover the insured entity, its directors and employees from claims which result from an alleged breach of professional duty owed to a third party.
It is important to recognise that the policy responds to both the allegations of a wrongful act (regardless of their validity) as well as indemnity’s paid to third parties which means the policy is essentially separated into two sections being;
Historically, the cover was tailored to suit professional practice that you would normally associate with ‘expert advice’ such as an Accountant, Engineer, or Real Estate Agent. But with an ever increasing rise in litigation, it is now seen as standard risk management practice to ensure all professional service-related businesses carry professional indemnity policy.
Every business is different and that’s why we ask the right questions at the right time—to ensure your policy is tailored to suit your business activities and needs. The reality is that the true value of any insurance policy is only tested in the event of a claim. By tailoring your policy, you can be confident that you aren’t leaving things to chance.
Whilst there are a number of factors which determine the coverage afforded under your professional indemnity insurance policy, there are only a handful of questions to be answered to generate an indicative quotation which we have detailed below:
The greater the potential risk of a particular occupation or industry group, the higher the premium will be. This perceived risk is based on an insurer’s review of previous claims data, as well as any legal requirement that may attach to a particular occupation.
In general terms, the greater the professional fees, the more complex risk issues are.
The higher the limit, the greater the potential risk and loss of the insurer. Therefore, the premium is higher.
nsurers require that you advise them of all Professional Indemnity (PI) claims made against your business. Whilst individual or one off claims do not normally raise a concern with insurers, a trend of litigation will always result in an increase in the premium and or terms and conditions.
The reality is we could allow you to quote, finalise, and purchase your policy. But to do so, in our opinion, would be unethical as it could leave you exposed in the event of a claim investigation or claim itself.
Professional Indemnity Insurance arrangements represent a contract at law. Whilst obtaining a quotation requires only a handful of questions to be asked, it is reliant upon Us, your broker, to ensure that the coverage provided is tailored to mirror the common risks that your business faces on a day to day basis. A failure to ensure that we do this properly will leave you exposed in the event of a claim, which defeats the purpose of purchasing the type of cover.
Outside of the basic quotation questions, we also need to know the following:
– What your key business risks are
– Why you are purchasing your policy
– What are your concerns
– What makes your business unique
Without asking these questions, how can we ensure that you are properly covered in the event of a claim?
No, but some businesses and clients would request for you to show your liability insurance policy before doing business with you.
Not all insurance providers are the same. FD Beck is not just an insurance broker. We are your advocate! We act on behalf you, 100% of the time, no questions asked. This ensures that you have access to our in-house expertise and claims process and handling knowledge. We are your representative—your concierge broker service for professional advice—and not a middle man for an insurer. We are here to:
– Negotiate with your insurer to ensure we get the best insurance solution to cover potential legal costs and third-party claims.
– Tailor your policy to meet your specific needs.
– Answer any questions you have as part of the policy purchase or throughout the policy period.
– Help manage your claims with your insurer.
Not all Professional Indemnity Insurance policies are the same. Not only do the policy terms and conditions differ from one insurer to another, but the fundamental basis of the policy can also be different.
Before signing any insurance policy document, ask the following:
– Is my policy organised by an Insurance Broker or an Agent of the insurer? Remember, there is a significant difference, particularly in the event of a claim.
– Is my policy limit ‘Costs in Addition’ or ‘Cost Inclusive’? The offering presented by FD Beck is ‘Cost in Addition’. Costs incurred in defending your claim are always viewed separately to your limit of indemnity. Should you be required to indemnify a third party, your Limit of Indemnity will always remain protected.
– Is my policy excess ‘Costs Exclusive’ or ‘Costs Inclusive’? All quotes issued by our online calculator are done so on the basis of being Cost Exclusive which means you will only pay a policy excess only if indemnity is granted to a third party. Therefore should you have to deal with a baseless allegation your business will not incur any costs when notifying of a claim.
In a society where litigation is now so prevalent (Australia is the second most litigious country in the world behind the USA), a Professional Indemnity Insurance policy is an essential approach to risk management. It helps protect both your business and personal assets from allegations of negligence, intentional damage, accidental damage, property damage, or breach of contract, regardless of their validity.