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What is PI Insurance (Professional Indemnity Insurance ) ?

   PI Insurance ~ Key Features 

PI Insurance also known as PII Insurance, PII, Professional Indemnity Insurance, Professional Liability Insurance, PI Indemnity Insurance or Indemnity Insurance.

• You may need PI Insurance if you are in the business of selling your knowledge or skills, regularly give advice to your clients, handle data belonging to a client or business, are responsible for a client's intellectual property, provide a professional service or could be challenged on your work.
• Everyone may feel confident in the quality of their work, but any business is vulnerable to a claim of negligence when professional advice or services fail to meet 3rd party client expectations thus causing financial loss.
• PI Insurance can help towards protecting you if a claim is brought against you by any client due to any problems therefore with work you have done for them
• PI insurance is compulsory for most professional businesses & services
• A PI Insurance policy may cover you for areas such as libel or slander, negligent statement or actions, professional neglect, malicious falsehood, passing off copyrights, breach of confidentiality.
• Covers many traditional professions such as architects, engineers, brokers, solicitors, IFA's, accountants, computer consultants
• Protects business's interests against claims for error, omissions, professional neglect for both principles & employees
• Without PI Insurance a company may expose themselves and run the risk of being sued for all sorts of claims.
• Typical exclusions may include - Overseas work, a claim above an agreed amount, prior incident policy cover
• Run off Insurance cover protects you if you leave your industrty or retire
• Retroactive cover ensures any new PI Insurance protects work covered via an old insurance policy

PI Insurance Explained 

Like the saying goes, a pet is for life not just for Xmas; PI insurance is therefore a prerequist for your professional business life, not just for that "one off" contract or the annual insurance contract.

Regrettably in business things can go wrong. Suppose, for instance, that you are a Consultant hired for a 9-month contract to provide your business expertise. The contract is finished & all is well until 6 months down the line a serious problems surfaces. You decided to save money, so only get cover for the original 9 months of the contract. You now have no professional liability insurance in place! Also, you cannot go back to that Insurer for the policy you paid for, which just related to the length of your original 9-month contract, as this no longer claimable upon. This all could cost you £££.

Conclusion - Don't simply get a PI Insurance Quote to cover the exact periods of a contract. If your insurance provider agrees to such a short-term period of cover, then look for another insurer. All public liability insurance policies relate to the policy in place when claims are made.

What happens if I intend to retire - What is Run Off PI Cover ?

If you intend retiring soon, or are winding the business down and moving on to a new area of operations - Make sure your professional liability cover is still in place. Even if you are no longer active in the particular field you originally had professional indemnity insurance cover for. There are many industries where this is necessary from legal to financial services. This is where Run Off Insurance is needed.

PI Run Off Insurance - EXAMPLE

Geoffrey Spencer is age 65, due to retire as a business consultant & just completed his final project. He has put enough money aside for his pension. Before he retires, he wants to make sure that no-one can spoil his hard earned retirement by suing for his past actions. He realises he can still be stung by costly claims of negligence years after his services were completed.

Geoffrey protects his business, finances & reputation after he has retired & ceased trading by taking out 'Run Off Cover'. Run off cover is a PI Insurance policy which provides protection when you no longer need to be covered for new work, but still need PInsurance to cover any possible future claims. Gordon decides he will have cover until he is comfortable that there is no longer any likelihood of problems with his work. As such, as most legal claims are 6 years from the date of the incident/accident - he takes his plan out for 6 years.

PI cover is underwritten on what is known as a 'claim made' rather than an 'occurance basis'. Under a 'claim made' policy coverage is provided only for claims reported to insurers during the policy period. It does not provide cover for any possible claims made after the period of PI Insurance expires. (even where the event giving rise to the claim occured during the period of insurance). 

What is a 'Retroactive period' in PI Insurance?

Retroactive Period cover is designed to protect any work insured under a previous policy. If you already have PI Insurance and are moving to a new PII Insurance Company, make sure that the policy has this. Given the nature of Professional Indemnity PI Insurance, often there maybe a long delay between an event and a resulting claim. As such, you need to be covered both at the time of the event and when the claim is made.

In conclusion, if you do want to change insurers, make sure that your new insurer will accept any new claims for prior incidents. How can I minimise Retroactive Period claims ? Make sure that any contracts drawn up, clearly define your responsibilities, and that any concerns/complaints are dealt with promptly. Keep an accurate record of all complaints and your actions to redress these.