When you got your latest professional indemnity insurance quote, what was your reaction?
a) Crikey that’s cheap.
b) Crikey that’s what I thought it would be.
c) Crikey that’s expensive.
In our experience it’s likely to have been the last one – swiftly followed by a request to see if we can 'make it cheaper'.
Sometimes we can, sometimes we can’t. And if we can’t, we usually have to explain why.
And therein lies the problem.
Money for nothing?
You see, professional indemnity insurance is a tricky one to get your head around. That's because it protects you from claims of negligence.
Unlike, say, car or office insurance, there’s no physical asset to cover. There’s no tangible value or definite, potential loss to consider. And that means it can be difficult to see what the price of your professional indemnity insurance quote is based on.
So, what exactly is being insured? If there’s ‘nothing there’, why is it so expensive?
The thing is, you can be dragged into a claim without having done anything wrong. So, what you're really buying is financial protection and a sturdy defence.
And while it's rare that our customers are actually negligent in the course of their work, it's less rare for them to be accused of it.
The upshot is that you're being asked to spend money covering something that may well not happen and which can be hard to imagine even if it did.
Seems odd, but that’s the nature of insurance. And you know that too -otherwise you wouldn’t be asking for a quote in the first place, right?
Real cost of your professional indemnity insurance quote
So why does your professional indemnity insurance quote seem relatively expensive if it's covering something that’s pretty much a once-in-a-blue-moon event?
Because when things do go wrong (and they do), they go wrong in an expensive way.
You can usually handle small issues and everyday mistakes yourself. It’s the big claims – things that can wipe out your business – that you need protection from.
A full-blown claim against you is, by its very nature, going to be a serious matter. It's likely something will have gone spectacularly awry and it'll take the insurer time, effort, expertise and money to put right. That, fairly obviously, has a cost.
The price they charge you is both a reflection of the risks your business faces (an assessment based on yours and your industry’s past claims) and a rough estimate of how much a claim will cost them.
Despite the rarity of blue moons, businesses are on the receiving end of actual and potential claims every day. They can’t be ignored.
But if you don’t have insurance, what do you do? Where do you go for help?
Solicitors aren’t exactly cheap and it’s unlikely you’ll have the time or the legal expertise to fight your own corner. Plus you could be faced with a big compensation bill.
So that's where your insurance comes in. In exchange for a premium, you get the specialist protection of an expert, experienced insurer – and you really can’t put a price on that (even if you think you can and it's too much).
So, yes, we think a couple of hundred pounds a year on professional indemnity insurance is worth it. In fact, it seems like incredibly good value.
For a quote, call us on 0345 222 5391 or click here.
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