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Professional Indemnity

Whatever the profession, cover is effectively a legal liability insurance policy that will indemnify the individual, company or partnership against claims made against them by a third party for negligent acts, errors or omissions occurring in the course of the business, which result in the claimant suffering (and being able to demonstrate) a financial loss.

Cover is provided up to a monetary limit for any one claim, the amount being agreed when the policy is taken out (although it can normally be increased during the policy term or at renewal with our consent and for an additional premium). This is known as the Limit of Indemnity. The limit that is right for you will depend on your individual circumstances and any mandatory requirements which are imposed on you by a professional body.

Policy cover will also extend to include any investigation and other legal costs which arise in the defence of the claim against you. Any such sums are normally payable in addition to the Limit of indemnity provided. However, this is not necessarily the case with all insurers.

The extent of the cover provided will, as a minimum, normally include:

  • Negligent acts
  • Negligent error
  • Negligent omission
  • Dishonesty of employees
  • Libel & Slander
  • Breach of Copyright
  • Breach of Confidentiality

However, cover can vary from policy to policy and insurer to insurer and so it is important to ensure that you have the cover that is right for you.

Professional Indemnity is different to most other insurances in that it operates on what is known as a ‘claims made basis’, meaning that the policy will only provide cover for claims or circumstances discovered and notified to the Insurer during the period of insurance, rather than errors or mistakes occurring during the period of insurance.

Professional Indemnity policies generally contain a Retroactive Date, which is normally the date that the policyholder first effects cover. Claims or circumstances arising from work carried out before this date are not covered, irrespective of when discovered and/or notified…..it would be inequitable to expect an insurer to pay for claims arising from work undertaken many years previously and for which no insurance was arranged at that time. However, you will normally be able to ‘buy-back’ cover for earlier work for a single, one-off additional premium. The Retroactive Date itself will move with the policyholder from one insurer to another, thus ensuring continuity of cover.