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Archive for the ‘professional indemnity insurance’ Category

Office insurance package policies along with professional indemnity

Wednesday, January 18th, 2012

Anyone in business nowadays knows that individuals, customers and even suppliers are becoming more litigious. The law has been changed in recent years to make it easier for members of the public to pursue a claim against anyone they see fit. We have all had to see or listen to TV or Radio advertisements enticing you to take action against others. Although there has been a huge growth in the claims by individuals, we are also seeing increased activity from on business claiming against another.

One trigger for this has been the build up to the recession, the recession and it’s aftermath. When cash is tight and also king, more businesses are prone to make claims than to absorb the costs themselves. A second trigger has been the availability of legal expenses insurance. Many business insurance policies now include an element of commercial legal expenses cover as standard. It is therefore easier for businesses to pursue action, in the knowledge that they have cover in place to pay for the legal costs associated with this.

It is therefore important that you have adequate cover in force to protect you against such claims. For most office insurance policies, the legal expenses cover is included as standard. Overall limits of indemnity are usually around the £50,000 to £100,000 mark. In addition to legal expenses cover, you need to make sure that you have adequate liability insurance, both public and products liability. For most offices though, the fees or turnover are earned as a result of services that are offered. A physical product is not always provided. In these cases you need to consider, carefully, whether there is a need or requirement for professional indemnity insurance. Most of the standard package contracts will actually exclude this cover.

There are a few, and we mean few, insurers that will offer all of the covers under one contract. However, in reality it is much more competitive to get one contract for the office and one for professional indemnity. PI cover is for your professional negligence. Public and products liability operate where these is evidence of physical damage or injury. For example the computer that catches light or the person that trips over. Professional indemnity need not have evidence of a physical loss, but a financial loss. You provide advice, for a fee, and someone suffers financially if this is incorrect.

If you are worried about whether this is a requirement for your particular business, then you speak to an independent business insurance broker and get their opinion on whether this is a requirement for your business or not.

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Professional indemnity insurance – which limit to choose?

Thursday, November 17th, 2011

If we are approached for a commercial building insurance quote, one of the main questions we will ask is “how much is the sum insured”? Unlike cover for your house, where there may be a blanket limit of £400,000 or £500,000, for commercial properties you will declare the amount. Whilst it is not easy to get this figure, the policy is very clear, you are covered for x amount, as long as it represents the correct rebuilding cost.

But what has this to do with professional indemnity insurance? Not a lot, except to show that with building insurance, you can actually, see and feel the “thing” that is insured. You can pay a surveyor to give you that valuation to confirm exactly how much you should insure for.

Now, if you are looking for professional indemnity insurance, how do you know what amount to insure for? If you are undertaking a contract for a customer and they are insisting on the cover being in force, then your job may be easier if they put a limit in writing to you. But, if they don’t or you are just looking for a professional indemnity quote, how do you decide what limit to go for?

The main insurers we use, will quote from £100,000 up to £5,000,000 any one claim. One quote this afternoon went from £290.00 at £100k to £4,3970.00 at £5m. You can see that there is a big difference in premium because there is a big difference in the potential cost to the insurers.

What you do not want to do is over insure yourself, the insurers of course enjoy this, because they get more money. Our job, as a business insurance broker is to get you the best deal, price and cover wise, for the insurance you need. Our advice is that you have to sit down, maybe with your colleagues and work out the worst case scenario cost and the average case scenario loss. Then, speaking to your broker you have to work out whether you go for the higher or lower or somewhere in between. It will also depend on whether your quote or cover is any one claim (better) or in the aggregate (less better!). As ever, get advice from a professional independent business insurance broker.

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Professional Indemnity Insurance – which limit to choose?

Friday, August 26th, 2011

Professional indemnity insurance is, along with all types of insurance, something that people do not really want to buy nor do they really want to use it. But, if they do need to use it, they want it to operate fully to cover their claim.

This means, when we get a new quote request, and we ask the customer what limit of indemnity do they need, we get one of, or a combination of these three responses:-

1) What is the minimum limit you can sell me?

2) I need a limit of £x under either the terms of a contract or because their professional body requires cover to be in force.

3) What do you suggest?

We never answer question 1 without addressing question 3. The minimum we can usually quote is £100,000, but this will be inadequate for most businesses in 2011. We then discuss with the client about, in the worst possible scenario, what could they face as a single claim. Following this we will usually quote three or four different limits so that they can see the differences, in premium, are not that great when you go from £250k, to £500k, to £1m to £2m.

If they ask for a standard limit due to a contract or membership of a professional body, we will ask if this is still sufficient. Being part of a professional body, with them asking for a limit is usually at a sensible limit. This is because the professional body knows what type of claims to expect. As an example, as a business insurance broker we have to have in force £2,000,000 worth of cover, in respect of each and every claim.

The problems occur when they are entering into a contract which does not state a limit, this is where they may be tempted to take the lower limit. It is of course up to the customer to choose, we can only recommend. But, if they are choosing a limit which we feel is inadequate, we will tell them this and give them the option of a higher limit. The difficulty is that the customer can sometimes perceive this as Businessinsure flogging them a limit that they do not need, so we can earn more money. That, however, is the brokers dilemma though, We have to give good quality professional advice, but the customers want it on the cheap.

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Cancelling business insurance – mid term

Saturday, August 6th, 2011

Anyone who has tried to get out of a mobile phone contract, before it expires, will know that some agreements can be quite costly. When you are getting a free phone or some other consumer goody, this is of course, not free.

The £30 a month you pay over 18 or 24 months is £540 or £720. The handset does not cost this much and you do get charged for many things that you may have thought where in in the package. Anyway, you can see where we are coming from. Technology has come on in leaps and bounds and it does not cost the telecoms company 10p to process the text you send. More like 2 or 3p, maximum, so you can see where the profit lies.

With business insurance, you are not quite so tied in to a contract. Most policies are purchased on a an annual contact and there are times when you may wish to cancel a policy mid way through the year. Certain policies are sold on what is called a minimum and deposit basis. This means that whenever you cancel the policy (outwith the 14 day distance selling timescales) you are liable for the full years premium. Usually though this is only for liability or professional indemnity insurance.

Most other policies, as long as you have not had a claim, can be cancelled without additional cost, on a pro-rata, or day by day, basis. If you have had a claim, your insurers are understandably entitled to look for the full years premium if you try and cancel early. But, for example if you move premises, radically change your business or need cover that your current provider does not give, then you are entitled to look for an alternative.

If your policy is paid on instalments, insurers may request an additional amount, usually around 25% of the outstanding premium, if a policy is cancelled early. This where you need to review, in full, any credit agreement you sign. Any problems though, speak to your business insurance broker and ask them, straight up, what happens if I cancel early? If anything, it will put them on their toes and they will make a special effort to look after you so you do not cancel mid-term.

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Professional indemnity insurance – excess levels

Tuesday, July 5th, 2011

The first part of this post does not relate to professional indemnity insurance, but it is relevant. BIB was asked yesterday to quote for a pub, it was a new venture for the customer, taking over a trading, city centre, pub. Now, we are quite proud of the markets we have for pub insurance, we can in most cases beat any other provider hands down on price and cover.

Our quote was around £700, which we knew was good. But the customer laughed and said thye had a quote for £400. Thankfully the customer was astute enough to let the alarm bells ringing in his head ask us why we were more expensive. I explained that our quote was the cheapest from the 7 providers approached, so it could only be more expensive because of cover, warranties, excesses or conditions being different. The customer emailed through their quote and lo and behold, the excess was over £1,000, there was no accidental damage cover, no legal expenses and the contents sums insured were half what we quoted. We sorted this all out and got the cover in place.

Now, what has this got to do with professional indemnity insurance? It is the excess levels. Not only are we seeing premiums starting to increase during 2011, insurers are also bumping up the excesses. Now, when we say bumping up this does not mean a £250 excess last year is now £300, more like they are trying to increase to £500 or £750. As a broker, it is our job to always find the customer the best deal, if we see an increased excess we will either get the insurer to reduce, or go elsewhere.

The same applies to PI insurance, a standard IT contractor with a £500,000 limit of indemnity may only have had a £250 excess over the past few years, some insurers though are pushing these up three and four fold. When you get your renewal through, check not only the premium, but the excess. If this has gone up as well, give us a shout and we’ll look around for you.

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Professional indemnity – is there more choice?

Wednesday, April 20th, 2011

There are a growing number of companies offering professional indemnity insurance. Traditionally, the market was fairly small and, compared to other package products, there are fewer insurers offering this cover. But, there is more choice out there. The key thing is that the commercial insurance companies that offer the cover are still being fairly selective.

Take solicitors professional indemnity, it is easy to see why a new insurer may move into this market. There are thousands of solicitors and they all pay thousands upon thousands of pounds for their cover. But, and it is a big but, it is not that profitable. The last four or five years saw a bit of price war with premiums slowly decreasing. A few new entrants made disastrous forays into this area. Quinn insurance suffered from underpricing and some slacker underwriting than other insurers. Hence they grew market share but they did not tend to pick up the right risks. This is always an issue for a business insurance that decides to move into a new area. They tend to take the easy route and “buy” themselves into the market by underpricing. But, with long tail liability insurance (such as PI), the claims turn around bite you on the bum years down the line of you are not careful.

It is all well and good entering the market, but three, four or even ten years down the line you can rue the day.

But, if you are a management consultant or IT consultancy, you may find it is easier to get yourself cover. The insurers that are involved in the market like the risks that give them less claims. Whilst this may seem fairly obvious it is sometimes more difficult to find the insurer that is going to charge you the right price. The best way to deal with this is to go to a business insurance broker, they will know the best way forward and what insurer, at the current point in time, is the best one to go to.

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Professional indemnity insurance – getting a quick quote

Saturday, April 2nd, 2011

Professional indemnity insurance is not rocket science. Now, everyone knows that, but you would be surprised to hear how complex this is made out to be when working for a major insurer.

One of my old bosses, who was pretty froward thinking, used to get irate with the old timers in the company who used to say things like, it takes 15 years to make a good insurance underwriter. His favourite riposte was that it took less time to to train to be a brain surgeon.

Both of them were right, in their own ways. The basics of commercial insurance are not that difficult to learn. This is why we have exams to sit through. It is the experience that counts.

Now there are certain categories of insurance where, in the past it would take you ages to get a quote. One of these is professional indemnity. In the good/bad (delete as applicable) old days, you had to speak to a broker, explain what you wanted, fill out a proposal form, post it to them, they would then send to insurers to get a quote, then a few days/weeks (delete as applicable) later, you would get your quote. Sometimes, you were so thankful to have a quote that you daren’t ask them to go elsewhere.

Nowadays though, in most cases things have changed. Yes, you still get the old dinosaurs that will only quote based on a fully completed proposal. Other, who plainly do get it, have websites that allow us, the business insurance broker, to get you, the purchasing customer a quote within minutes. Of course, there are certain categories where we do have to refer to insurers, but for many trades, instant quotes for PI are available.

If a broker says you have to fill in a proposal form first, your question should be – is that really necessary? If they say yes, at least give one other broker a shot.

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Professional indemnity insurance – why is it so expensive?

Monday, February 21st, 2011

Depending on the type of trade, when we get some people a professional indemnity insurance quote, their first response is to question why it is so expensive. Not because that are just unhappy about the premium, it is usually because they cannot see where the risk actually is. The whole point about insurance is that you are buying financial protection for that “once in a blue moon” event.

What you are not buying is a policy that covers out for the losses you reasonably expect to make in business. What we mean by this is when you have to re-do some work or go back and fix a bit of snagging. Everyone accepts that this is part of their business and the costs are built in.

With a business insurance policy, you are looking for (in exchange for the payment of a premium) an insurer to pay out for the “big” claims that could potentially destroy your business.

This is why professional indemnity premiums may appear to be more expensive, in reality they are not, because the potential costs of claims are difficult to quantify. What you can be sure of is that if a client, or ex-client, decides to pursue a professional negligence or PI claim against your business, then this is because it is serious. There are costs, and time, involved for any company that is looking to claim against another.

So, when you get your professional indemnity quote at, say, £500 per year, when you cannot perceive there to be any risk, then you have to accept that there is going to be the potential of a claim, otherwise you would not be getting the insurance cover in the first place.

What you can do, is to look around to see what is the cheapest premium for the level of cover you need. Insurer A may charge £1,000 whereas insurer B could be half that. It just depends on the insurers appetite for your particular type of business. If they want this business, they will quote a competitive price, if not, then they will price themselves out of the market.

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Business insurance – feedback please

Saturday, January 22nd, 2011

Here at Businessinsure, on a busy week, we can providing in excess of 100 new business insurance quotes. In addition to the many thousands of existing policyholders requiring renewal, amendments and of course claims.

We do pride ourselves on being one of the best internet and telesales specialist SME brokers in the UK. If we can’t get a quote to you within an hour or so, we feel we have somehow failed. Of course, it is not a bad thing, there are reasons why it can take a few hours to get a quote, particularly when it is a more complex or larger risk.

What we do want though is feedback. For example, we had an office insurance enquiry, including professional indemnity. Their existing insurers had increased from just under £3,000 per annum to slightly over £4,000. A 30% increase. In any one’s books, this is a bit excessive as they had been claims free for over 5 years.

We duly got a few quotes, the best combined insurance, including the PI, was just under £2,600. So we quoted, all within a couple of hours of the initial call. The problem was, when we phoned them up to see how we had got on, their existing insurers had miraculously dropped from £4,061.95, to £2,500.00. So, we had done all the work, we had forced the clients insurers to do something drastic and unfortunately, because we were so quick we gave the existing insurers the chance to slice a chunk off the premium.

If this is happenign to you after we have quoted, we would appreciate you letting us know. Insurers are a law to themselves. If the client had not looked around, they would have got away with a 30% increase.

You have to remember though, that changing your business insurance provider is nowhere near as complicated as your existing insurer will make out. If you are looking for a cheaper quote, give us a try today.

Posted in business insurance, professional indemnity insurance, professional indemnity insurance quote | No Comments »

Professional indemnity insurance – a legal requirement?

Monday, October 18th, 2010

Professional indemnity insurance is a form of liability cover. If you provide a service and/or advice in return for a separate fee or as part of an overall contract, you could face a claim for professional negligence.

There is no legal requirement, under UK law, to have this cover in place. What you may find though, and this is happening more and more, is that you are required to have this as part of a contract you may carry out. It depends whether you are working for the private or public sector whether cover is requested and also, at what limit.

Unlike employers liability insurance, which is not only legally required but must be at a minimum limit of indemnity of £5,000,000, you can get professional indemnity at varying limits of indemnity, usually starting at £100,000.

If you do not have the cover in place at the moment, you will usually have two options. You can either add this to your existing combined (employers, public and products) liability insurance or you can take out a separate policy. Adding this to your existing policy is rare. The reason being that there are so few insurers that offer the standard combined liability insurance as well as professional indemnity. There are some that will do this, but they do not tend to be competitive across the board.

You will be better speaking to a broker and at least getting a quote both to add to your existing policy (if possible) and as a separate stand alone cover. At least this way you can compare the options that are available.

Also, speak to the broker and get their advice as to the limit of indemnity that you not only would possibly need but also that which would comply with your contract.

Posted in business insurance, employers liability insurance, professional indemnity insurance | Comments Off