Choosing the acceptable Sum Insured (or Indemnity Limit) for your professional indemnity Insurance policy will be problematic. It is necessary that scrutiny is given to the adequacy of the selected total insured when renewing or removing a brand new Professional Indemnity policy. Under Insurance will result in a considerable monetary loss to both you personally and your business. Some queries to think about when considering the suitable total insured for your business:
• Has your company grown in size since your last add protected review? If so take into account an increased limit.
• During a worst-case scenario, if something went wrong, what would be the monetary loss to third parties?
• Bodily injury claims can be an expense to each defend and settle, are you involved in a trade with potential exposure to physical injury claims? (eg. Medical Professions, Architects, Engineers, Personal Trainers).
• What is the potential for consequential economic loss to any third party? Suppose not solely about your purchasers but also third-party users of your shopper's facilities.
• Do you have an unlimited variety of purchasers where you perform a similar service, systematic errors can result in multiple claims?
• Do you handle sums of money on your client's behalf, like an accountant's trust account? Losses due to fraud and dishonesty of workers may be a significant professional indemnity exposure in this case.
• What is the level of potential defense and investigation costs incurred by or on your behalf over the life of the claim?
• Is the policy limit provided by your policy 'Inclusive' or 'Exclusive' of prices? (if an Inclusive limit is all that is accessible then you must think about a higher limit)?
• How many defendants are doubtless to be party to a claim or action? A lot of parties to an action the additional difficult and costlier it's to settle a claim (for instance solid construction comes).
• What is the general contract/project price of your most significant contracts? While you will play only a little part and just earn a tiny amount of fees your acts, errors or omissions may delay the whole contract/project leading to a significant loss.
• How long have you been practicing? Your exposure increases the longer you follow, in some cases, it might take years before a liability becomes apparent to the Insured (for example a fault in building style)?
• Have you made any acquisitions over the past twelve months? If so has there been a significant increase in exposure to your business regarding each service offered and size of your practice?
• Have you ever signed any contracts which require you to own an increased add insured?
• Has legislation modified that requires you to hold a minimum Professional Indemnity policy limit?
• Does your Professional Association need to you carry a minimum Professional Indemnity policy limit?
It's vital to note that almost all professional indemnity policies have an Under Insurance or Average Provision which applies where the number required to dispose of a claim exceeds the limit of the total insured within the system. When this occurs then the insurer is liable solely for a proportion of the whole costs and expenses. This shall be the same proportion of the entire expenses as the policy limit bears for the whole of the amount required to dispose of the claim. Suppose through these problems carefully before when considering your professional indemnity limit.