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Is your insurance ‘in the aggregate’ or ‘any one claim’?

31/08/2011

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The bottom line

Have a look at your professional indemnity insurance schedule. Specifically the bit about the level of cover.

Is it 'in the aggregate' or 'any one claim'? And why does it make a difference?

Well, these terms relate to how much money your insurer pays if there's a claim.

That matters because it could be the difference between your insurer paying all, none, or just part of a claim.

Same coin, different sides

Let’s say your professional indemnity insurance policy has £1m level of cover. If a valid claim is made against you, the insurer pays up to £1m in damages and legal costs. Simple enough.

If your policy is in the aggregate, £1m is the maximum your insurer pays for all accumulated claims in a policy year, including associated legal costs. Imagine your insurer has set aside £1m with your name on it, and every expense to do with your claims comes from it.

If your policy is any one claim, £1m is the maximum your insurer pays for each claim in a policy year, with each claim's legal costs paid in addition, and to the same level of cover. There's no limit to the number of claims you can make, either.

For example, let's say you’re unlucky enough to have three claims made against you, and in total they cost £1.4m to put right. If your aggregate level of cover is £1m, you’re looking at a £400k shortfall. Ouch.

If your policy is any one claim, that same £1m level of cover applies to each of the three claims. Assuming none of them individually cost more than £1m to fix, there's no shortfall.

Plus, as legal costs are covered separately, each claim effectively has a £2m total fund, split half and half for damages and legal costs.

More is more

As you can see, an any one claim policy gives you more protection. There’s no danger of cover ‘running out’ the same way an aggregate policy could (although the chances of that happening are pretty slim).

Because of this, they usually cost more to buy. For many, at least those in low risk occupations, just having professional indemnity insurance is usually enough, however, and an aggregate policy fits the bill nicely.

Which policy is right for you depends on a lot of things: what you do, your contract values, your budget etc. It’s certainly worth having a chat with your broker and getting their advice on what you need.

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