Not all professional indemnity (PI) insurance is born equal. Neither, as you’ve no doubt discovered, are all policies equally priced.
That makes it essential to know what to look out for when you compare professional indemnity insurance policies. Because plumping for the wrong one can cost you dear further down the line.
As a rule, there are three key areas to consider if you’re looking to include PI in your business insurance. First, and possibly foremost for a lot of people, is how much it costs. Second is the extent of the cover you get. And third is how claims are handled.
Plus, there’s the matter of where to buy your PI insurance from. Do you try a professional indemnity insurance comparison quote site? Do you go direct to an insurer? Or do you opt for the broker route?
So many things to think about and so little time. No doubt time you haven’t really got to spare if you’re trying to run a business.
So, here’s some help with finding the right PI insurance. First, we’ll look at what you need to think about when weighing up the pros and cons of different policies. Then we’ll consider where to go to get the best PI fit for your business.
3 important things to think about when you compare professional indemnity insurance
Everyone likes a bargain. And if you’re making a professional indemnity insurance price comparison, it’s often tempting to go for the cheapest policy on offer. They all do the same thing, after all.
Only they don’t. The range of cover offered by the least costly policy may fall far short of that offered by the more expensive alternatives. Equally, it might not be suitable for your particular line of business and could leave you vulnerable.
Also, the excess payable for claims can be considerably higher at the cheaper end of the spectrum. Or the level of cover provided might be on the low side and quite possibly insufficient to cover all the costs associated with a claim.
Look out for cheaper policies being ‘in the aggregate’ too, rather than the preferable ‘any one claim’. In the first scenario, all your claims costs come out of one pot, and once it’s gone, it’s gone. But in the second, each claim is treated separately, each time, up to the limit of cover.
Something else to check when you compare professional indemnity insurance is that retroactive cover is offered and you won’t have to pay extra for it. This covers you for claims related to work you did in the past. It’s important because claims can take months or even years to come out of the woodwork.
It’s advisable to have hidden costs on your radar as well, as these can stack up. Some providers charge additional ‘admin fees’ if you want to change the details on your policy or add cover before renewal. Others add interest to Direct Debit payments.
As with anything, you get what you pay for. And although temptingly priced, cheaper policies can fall short of what you need or expected. So, the best advice is to do your homework before you buy.
2. Extent of cover
Professional indemnity insurance covers you for accusations that you did something that caused your client financial or reputational harm. Or maybe you failed to do something you should have. So far, so straightforward.
But it’s not. Because not all PI policies offer the exact same cover. That makes it important to dig into the way each policy is written, to make sure it offers the breadth of cover you need.
It’s surprising where and how often trouble can rear its unwelcome head. That means you need a policy that covers all the different types of hot water you could find yourself in – especially if you work in one of the riskier professions.
With that in mind, certain professional bodies, like those for architects, surveyors, engineers, and accountants, require practitioners to have a specific wording for their PI. They also require a minimum level of cover and even stipulate which insurers you can buy your policy from.
Similarly, if you work in other specific areas, you’ll want a PI policy that covers your particular risks. Look out for useful, industry-relevant cover such as supplying deliverables for IT, or pre-emptive damage limitation for marketing activities.
One final thing to be aware of is a policy’s geographical and jurisdictional limits. These dictate where you can work, where your clients can be based, and what country’s laws any work you do must be governed by. They’re hugely important if you work abroad or have international clients.
So, always take time to compare professional indemnity insurance and individual PI policy wordings carefully, looking out for limits and exclusions. Because if you get it wrong, you may find yourself facing a claim that you’re not covered for.
So, the worst has happened and there’s a claim against you. A client says you’ve been negligent in the work you’ve done for them. And even if you don’t think the claim’s got legs, you’ll have to do something about it.
Time to call on your insurance, then. So, you make the call….and then what?
The claims process is something we hope you’ll never have to get involved with. But the reality is, we’re becoming an ever more litigious society. And professional indemnity claims make up the second-biggest portion of all the claims we deal with, after contents and portables.
How the claims process is dealt with has a big say in how a claim affects your business, both in terms of the stress it causes and the eventual outcome. Plus, the potential damage to your reputation, of course.
It’s why you have professional indemnity insurance in the first place after all. But the claims process has more to do with how you bought your PI policy once you’d done your professional indemnity insurance quote comparison.
And we’ll look at that in the next section.
Should you buy your PI from a professional indemnity insurance price comparison site?
We’d say probably don’t buy from a comparison site. No matter how many cuddly toys wearing cute little outfits you can collect or what kind of voucher you’re offered. And there are sound reasons why.
Sure, it’s tempting. By going the comparison site route, you get their software and algorithms to do all the hard work for you. Just a handful of questions and a few clicks, and you’re presented with a clutch of policies ranked in price order. Easy.
Only what you may not realise is that you’re only being shown a certain slice of all the available policies on the market. The comparison sites use 3rd party providers to feed through the products presented to you on screen. And they pick and choose what you see. Some insurers don’t feature on comparison sites at all.
Now, that’s all very well if you’re talking car or home insurance. There are dozens and dozens of insurers out there offering policies for your latest wheels or your precious property. So, you’ll no doubt be presented with plenty of policies to choose from and will hopefully be able to find what you need.
But professional indemnity insurance is different. It’s a specialist market and only certain insurers serve it. It’s also a much more complicated type of insurance, where getting the right advice on which policy fits your particular business best can be invaluable.
In fact, where PI is concerned, you’ll probably find you get the same small selection of PI policies served up across all four of the main price comparison sites. And you’ll then have to make all the comparisons between them yourself.
The question is: do you feel confident doing that? Do you have the necessary technical insurance knowledge to cut through the jargon and be sure of what you’re getting? Or…
Should you use a broker instead when you compare professional indemnity insurance?
We’d say yes. But we would say that, wouldn’t we…being a broker ourselves and all that. And again, there are sound reasons why.
Brokers are specialists in insurance. They can be online, at the end of a phone, or both, like us. And what makes a difference is that business insurance brokers know the complicated professional indemnity market inside out. They can use their expertise to identify exactly the right policy for a customer’s needs.
Now, you might say, what’s the difference between using a broker and a price comparison site, then? You might even say you get less choice if you go the online route, because the broker’s actually doing the choosing for you.
But that’s exactly the point. Brokers who have ‘advised sales’ status from the Financial Conduct Authority (like us) are trusted to use their expertise in guiding customers to the right policy for their business. So, they get all the cover they need.
All the hard work goes on behind the scenes in response to the way you answer questions your broker asks you. So, by the time you’re presented with a policy option, the broker already knows it’s an ideal fit and has a wording that will keep you protected.
And if you’re still feeling a bit miffed, you can pick up the phone and call your broker to chat things through in more detail.
Oh, and that wasn’t just a casual mention of the Financial Conduct Authority by the way. It’s important, because the FCA regulates insurance brokers like us and makes sure they stick to stringent rules and regs. Those regulations ensure the customer is treated fairly and gets the deal that’s best for them.
Finally, we need to mention claims. Because how claims are dealt with should be a key consideration in any professional indemnity insurance comparison.
Buy through a comparison site or buy direct and you’ll also be dealing with the insurer directly if you have to make a claim. That could mean large call centres and a claims department perhaps not fully set up to deal with the technical complexities of some PI claims.
Buy through a broker and you’ll have a dedicated claims expert by your side, to guide and help you through the whole process. Professional indemnity claims can be tricky and slow-moving, so having someone fighting your corner with the insurer and easing the claim’s progress can be invaluable.
Anyway, that’s enough trumpet blowing about the value of brokers. Hopefully, you’ve now got all the information you need to compare professional indemnity insurance policies objectively.
You’ve also seen the implications, good and bad, of where you buy your policy from. And since knowledge is power, we reckon you're now sufficiently empowered to make the best choice for your business.
If you’d like to know any more about professional indemnity insurance or get a quote, click here. Or speak to the team on 0345 222 5391.
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