Why do I need Professional Indemnity Insurance?
Professional indemnity (PI) insurance is aimed at protecting the policyholder against their legal liability to pay damages to claimants who have sustained a loss arising from the policyholder’s professional services. This is most commonly a claim for financial loss following an allegation of negligence against the professional. The claimants are typically the professional’s clients but can also be third parties.
Cover is written on a claims made basis, which means the policy responds to claims, which the policyholder is first aware of and notify to us during the policy period. Errors & omissions (E&O) insurance is a term often used interchangeably with PI and in a practical sense, there is not much difference.
Why buy PI cover?
The main reasons for buying PI cover are:
1. Peace of mind.
Professionals are at increasing risk from litigation, which could have a huge financial, reputational and time impact upon their business.
2. Access to expert defence.
The policy will defend the policyholder for allegations, no matter how unfounded. Solicitor’s fees are expensive and finding a top quality specialist is difficult. Hiscox will manage the claim process to minimise the impact on the policyholder.
3. Required under professional regulations or the law.
It is a compulsory regulatory requirement for certain professions to have PI cover. The professional body will typically state minimum limits of indemnity, state what policy wording must be complied with and have a list of approved insurers.
4. Required under contract.
It is increasingly common for client to insist on their professional consultants to supply evidence of PI cover before they will use them.
What Level of Indemnity do I need?
There are a number of levels of indemnity on offer, from £100,000 - £2,000,000. The level of indemnity that you will need will depend on your exposure and the range of services you provide.
Considerations might include work undertaken in the following areas:
- Building valuations.
- Non compliance with building regulations.
- Failure in service.
What is Estate Agents Professional Indemnity Insurance.
Letting agents / Estate Agents are the first part of the chain when it comes to buying or renting a property.
They will market a property and introduce potential purchasers to the vendors / landlord. It is at this stage that the estate agents main role ceases although they will correspond with all parties to make sure that the sale / letting goes through smoothly. The estate agent will earn their fee from the vendor by agreeing a commission rate linked to the value of the sale at the outset or a monthly commission rate.
A failure in their duty to manage this process properly could lead to a claim.
Our policies automatically comply with the requirements of the Ombudsman for Estate Agents scheme.
Retroactive cover.
A considerable period of time, often years, can pass between the professional providing their service, the claimant discovering they have suffered a loss arising from the service and the claim being brought against the professional.
It is common market practice to have “retro date inception” (RDI) for brand new policyholders who have not previously bought PI cover (be that from us or another insurer).
This means that Hiscox exclude claims arising out of business activities performed prior to the inception of our policy. We will show a specific date (the “retro date” or “retroactive date”) on the clause and maintain that same date for subsequent renewals.
For new policyholders to us, which have had cover with another insurer up until the date they incepted with us, we will typically give the same amount of retroactive cover, which they previously enjoyed with their last insurer. We will ask the broker / policyholder to confirm the exact date for us to show in the policy / schedule.
Run off cover.
The professional’s liability from their past activities does not vanish just because they stop buying PI cover, stop providing professional services or stop trading. They are still liable, subject to the Limitation Act 1980 which will define the length of time within which a claim may be brought (this is generally six years but there are various different limits depending on the circumstances of the loss or damage).
It is compulsory under professional regulations for certain traditional professions to retain run off cover for a number of years after they cease to trade.
Hiscox Target market.
Any firm involved in residential estate agency, or lettings work. These can be firms operating from one office or as a chain. We would expect a minimum of three years experience for the principals. There are no formal qualifications for these activities. For commercial estate agency, we need to make sure that the proposer is not providing advice on the investment potential of an acquisition.
Is my Quote Competitive?
Endsleigh are committed to treating customers fairly and have an agreement with Hiscox that we will match any price providing cover is like for like.
How do I Pay?
Our insurance providers, Hiscox, offer an “Interest free” monthly payment option!