Business owners should be cautious when using price comparison websites to research and purchase professional indemnity (PI) insurance, as the cover provided could be inadequate for their needs. PI is a staple of business insurance and protects businesses against claims their work wasn’t up to scratch.
Suffolk-based insurance broker PolicyBee is warning those buying PI that securing the correct cover for their business activities is essential to avoid any nasty surprises in the future.
Although everyone likes a bargain, and price comparison websites often provide competitively priced PI insurance, these usually represent just a small selection of the available policies out there. Business owners need to be careful that the cover they are being offered is sufficient for what they do and will cope with the potential legal and compensation costs associated with larger claims.
Most people buy insurance believing, or at least hoping, they won’t ever need to use it. But PI claims are in fact one of the most common for insurers and made up over a quarter of all claims handled by PolicyBee in 2020.
Importantly, PI claims are also the costliest. Last year, PolicyBee’s largest PI claim was settled at £465,000. And that excludes legal fees. The potentially huge sums involved in PI claims would cause serious concern for most business owners, making it crucial they have a policy with the capacity to cover the whole cost.
PolicyBee has put together a checklist of things to look out for when buying a PI policy:
- Does the policy offer retroactive cover, to deal with claims concerning work done in the past, maybe months or years ago?
- Are there any ‘hidden costs’ in the form of admin fees that aren’t stated upfront?
- Is the level of cover offered enough to cope with potentially the biggest and most complicated claim you could face? Is there a big excess to pay?
- Do you need cover for unique risks associated with your particular business activities?
- Do you belong to a profession that demands a specific policy wording or a minimum level of cover?
- Are the policy’s geographic and jurisdictional limits wide enough to cover where you do business, and who you do it with?
- Have you read carefully and understood the limits and exclusions of the policy?
Lisa Carr, customer care team leader at PolicyBee, said: “Professional indemnity insurance is essential for every type of business. The danger of buying a policy on price alone is that it may not include all the cover you need, because not all professional indemnity policies are created equal.
“PI claims can be quite complex, often involving investigators, loss adjusters and solicitors arguing the case and a court deciding how much compensation the insurer should pay. For this reason, claims can take months to resolve.
“Although price comparison websites give quick results, they tend to exclude whole sections of the insurance market that will offer the kind of cover a business needs. These are all reasons why we recommend considering a broker for your business’s insurance requirements. They have the knowledge to guide customers to the best policy for their business, whether that’s online or in person, and can reach corners of the market comparison websites can’t.” For more on how to compare professional indemnity insurance policies go to: https://www.policybee.co.uk/blog/compare-professional-indemnity-insurance