Professional liability insurance also called professional indemnity insurance also known as errors and omissions insurance is a form of insurance which indemnifies professionals against claims arising out of actual or alleged negligence by the professional, instituted against them by third parties (the beneficiaries of the professional’s services).
All professionals should have professional indemnity insurance. Provided the claim is the subject of indemnity, cover includes defence costs including when the legal action turns out to be groundless.
Any defence costs paid by the Insurer to defend the claim, will erode the limit of indemnity the Insured has with the insurer so regard should be had to the risk of negligence arising in professional services being rendered as well the likely costs of defending any claims to ensure one proposes for the correct amount of insurance required from the insurer.
Professional liability insurance policies are generally set up based on a claims-made basis, meaning that the policy only covers claims made during the policy period which means the policy has to be in force when making the claim and the cause giving rise to the claim must have occurred after the coverage commenced.
Claims which may relate to events occurring before the coverage commenced not be covered. At SRM we offer retroactive date cover. This means that claims made during the policy period but which relate to an event which took place earlier than the inception date of the policy, are covered.
Be sure to select this cover!
At SRM coverage for professionals is annual cover and must be purchased on an annual basis. The reason for this is that each year the insurance requirements of the professional may be different. The professional’s gross fee income could differ from year to year.
Cover should be in place for as long as the professional requires it, that is it should be renewed year on year to ensure continuous cover until it is no longer required.
Cancelling a professional indemnity policy can effect cover, for instance a break in coverage could result in what is called a “gap in coverage,” which is the loss of coverage for all prior errors / omission which occurred during that gap.
Why you need it?
You’ve worked hard to set up your business, so it makes sense to protect it.
Get that peace of mind that a policy will indemnify you against claims and the associated defence costs in the event that you are held liable to compensate a third party who alleges you have been negligent in the conduct of your practice as a professional.
At SRM we ensure you receive tailored cover as a professional in your field! Connect with us and take the first step to securing professional liability insurance.