What is PI Insurance?
In the case of Professional Indemnity insurance it’s a type of liability insurance that provides cover for the financial (note that it is financial consequence only) consequences of neglect, error or omission by the firm taking out the policy .
In addition to the above the policies are designed to provide for the legal and other costs and expenses incurred in the defence of any claim.
Not all policies are the same and wordings between insurers differ – so that’s where the label says ‘professional indemnity ‘, the contents within the policy may differ greatly. This is where you need a firm like ours to help you through the insurance terminology maze.
In addition to a true claim being defended there are many allegations of negligence brought against the professions – By having a Professional Indemnity Insurance policy in place you are giving yourself access to resources and expertise to defend the allegation of professional wrongdoing against you and so protect your reputation
Everyone owes a duty of care to show reasonable care and skill when they are engaged to provide a service to someone. If someone fails to exercise this duty (i.e. is negligent) they may be liable for losses incurred by their client, and/or third parties. The problem is that even if you are innocent it may be costly to prove it/ defend the allegation of neglect.
The mechanics of the policies are that a person purchases Professional Indemnity insurance. If a claim is brought, it must be brought against the Consultant Firm and the person making the claim must first prove liability against the Consultant Firm (i.e failure to exercise reasonable care and skill in the delivery of its service). The policy works in providing expert advice and legal expense cover in defending the claim and if a judgement is made against the defendants the policy will then pay the award.
The above is a very simplified summary of PI Insurance – There are terms conditions and other factors pertinent.
Limits of indemnity?
Policies have what’s known as a limit of indemnity which is a cap on the amount that insurers will pay in the event of a claim. You choose this limit when you take out the policy – the limit of indemnity you choose should reflect your exposure to claims for Professional Indemnity.
Certain policies have what’s known as an Aggregate Limit of Indemnity – this means that the total that will be paid for ALL claims in an insurance year – including the costs and expenses relating to the defence of claims will be capped at the Limit of Indemnity chosen.
Other policies are more favourable and the limit of indemnity given by an insurer would be for Any One Claim limit, which means that one could have a number of claims and the limit would be applicable to each of these claims – The Any One Claim limit policy is the preferable – if there is a choice of quotes.
Claims made wordings
Professional Indemnity insurance operates on what is known as a ‘claims made’ basis. This means that it is the policy in force at the time the claim is notified which will operate, irrespective of when the work was actually undertaken or when the alleged act of negligence took place. The important thing to bear in mind is that people a professional has done work for can bring claims many years after services are complete (subject to the relevant limitation periods) – so we cannot over emphasise the importance of maintaining cover into the future – even after you may have ceased to practice.
Retroactive date
Many professional indemnity policies come with what’s known as a retro active date – This means that the insurer will not provide cover in respect of any claims brought/arising from work carried out before a certain nominated date – The Retroactive date (Usually the commencement of your first Professional Indemnity policy)
Reporting Clauses on policies – Claim circumstance
As with any insurance there are conditions in policies – Like most there is a condition that you report any claim or potential claim (as well as an actual claim) – What is important to remember in the wordings of PI or Malpractice Insurance is that you must not only report a ‘Claim’ but you must also report ‘Circumstances’ AND you must report as soon as you are aware of them – Leaving it ‘till things develop or progress can leave you effectively without cover as insurer may claim that you breached the reporting conditions on the policy, effectively prejudiced their position and therefore are not entitled to indemnity under the policy. In fact this area causes the most disputes on professional indemnity insurance.
Briefly (but not in policy legal terms – so this is a guide only!) you are required to notify insurers when any of the following occur:
(A) If someone indicates to you that a claim is likely to be made against you or they threaten to sue you for some alleged negligence.
(B) If you are aware of any direct or indirect criticism of your firms professional services, which could give rise to a loss to a third party/client – Non payment of a bill might indicate problems such as this.
(C) If you are aware of any errors or mistakes in your professional services, (which could give rise to a third party loss) or if you were not happy with the work you carried out or that, this, in some way was incomplete or inadequate (even if this work was carried out by one of your subcontract consultants).
(D) If you are aware or somebody indicates to you that they are not happy with the professional services of any of your sub-consultants or people you are responsible for and that the work of these persons may give rise to a financial loss a client/ third party.
Remember – in reporting, it doesn’t matter that you might consider the intimation of a claim as spurious, unjustified etc…The thing is you have to report the claim or circumstance to the insurer as soon as you are aware of it – otherwise you’ll effectively negate the benefit of having a policy at all.
Claims examples
Not keeping adequate records
Insurance broker asked to provide long standing clients with details of the insurers they had been with over the previous twenty five years as this information required to do with an industrial disease claim where all insurers involved with the client were required to be put on notice – Brokers unable to provide the information and were found to have a liability for inadequate record keeping.
Rushing Work leading to claim for incomplete checking of same
Loss adjuster was in a bit of a rush prior to going on holidays and recommended settlement of a claim which was in fact an amount relating to another clients claim. The insurer ended paying out a claim for €30,000 instead of €13,000 – Loss adjuster sued for error.
Junior or inexperienced staff being used in inappropriate circumstances
Accountancy firm allowed junior to process tax refunds for a Property Tax scheme – Scheme had a closing date which junior ignored and had gone on his annual holidays for the three weeks prior closing date for the claiming of refunds – Eighteen clients were unable to claim the refunds rightly due – Accountancy firm sued.
Taking on too much work – not fully resourced
Forestry consultant was offered a batch of clients from another colleague that was emigrating – The consultant reckoned he could accommodate all the extra work with no additional staff – result was that plans that had to be submitted for a planning application for one client were not done and client ended up being put back some six months on a major project.
Ineffective or incomplete works
Software company employed to design a custom accounting system for office – They were paid some eighty thousand to develop and had a time frame of fourteen months – the testing system which the software company had for verifying the true worth of its software was ineffective causing large loss in revenue to client when system went live – Software company sued for the increase costs incurred by client and loss of revenues.
Failure to diary items that needed chasing up and critical dates missed
Solicitor failed to lodge a personal injury claim for client within statutory period effectively disqualifying the client from any potential compensation – Case then brought by client against the solicitors– Successful.
Taking on work that person had not the relevant experience in – but had a qualification for
Newly qualified engineer undertook design of windfarm system which was to be used to power a shopping centre – Engineer had worked in civil projects before and had undertaken supplementary course in alternative energy sources. Wind farm was not suitable for the project and was not able to power the centre adequately and ended up being scrapped – Engineer sued for losses incurred by developers.
Other clauses terms
The reality is there are many in all policies, PI policies are no different – We don’t want to bore you with pages of insurance terms and conditions – The important thing is if you take out a policy you should be familiar with what it is you’ve purchased and the good thing is that if you chose to place your business with us you access not only many insurance markets – You access almost half a century of expertise …
Why do I need PI insurance?
Everyone owes a duty of care to show reasonable care and skill when they are engaged to provide a service to someone. If someone fails to exercise this duty (i.e. is negligent) they may be liable for losses incurred by their client, and/or third parties. The problem is that even if you are innocent it may be costly to prove it/ defend the allegation of neglect. That’s where Professional Indemnity comes in.
Professional Indemnity insurance is a type of liability insurance that provides cover for the financial (note that it is financial consequence only) consequences of neglect, error or omission by the firm taking out the policy. We have more detailed explanations for you here.
How do I get a quote?
For certain occupations we can give a quick idea of a premium – If your occupation is on the dropdown list
follow this link and you will get an indicative premium.
If your occupation is not listed then follow the advices below.
Insurers base their quotes and premiums on a number of factors , but occupation and fee income are one the major determining factors in the quote. In fact for many of the non traditional professions ( like solicitors , accountants , engineers , insurance , IT ) the link above will often give you a good idea on premium.
The insurer can only quote on what you tell them you do – so you have to be sure that you provide them with all the facets of your occupation – not only the bits that make you ‘fit’ into an occupation heading.
We place great value on being sure that we have all the information – to provide you with the most appropriate and best quotes – So we ask that you do the following.
I already have a policy in place and just want a quote ?
If you currently have a PI or Malpractice Insurance in place – All you need do is email us a copy of your renewal proposal – This will generally be enough for us to quote you – There is generally no need to complete any new documents to get a quote.We want to make your online PI insurance purchase as simple as possible.
Email to info@piinsurance.ie or visit our CONTACT US page
Any questions please call us on 353 (0) 91 563518
I haven’t had Professional Indemnity insurance before?
Go to the QUOTES area of our site – have a look through all the different occupations. If you see your occupation listed on the quick quote section, you’ll get a quote straight away and can buy. If your occupation is not on the quick quote option, simply complete one of the online forms and we will be back to you within a day or so with quotes.
Email to info@piinsurance.ie or fax to 091 563616.
Want to discuss things first – Please call us on 353 (0) 91 563518
Doing business with us makes your online professional indemnity insurance purchase easy.