A quote from a live twitter feed a last month stated: “PI Insurance – quote on line £268 – quote form a broker £2,568 – compute that!” I want to highlight the danger of buying Professional Indemnity Insurance online and explain why it is essential to gain the advice of an expert before purchasing.
First of all the terminology that an individual may use to describe what they do, can be vastly different to the wording their professional indemnity insurer would use in a policy. If not highlighted by a professional this can lead to disastrous consequences.
Take the example of the lady who took out management consultancy professional indemnity insurance because she advised management on the technical specification of Missile Systems. What was actually needed in this case was an Engineer’s policy. What may seem cheap to begin with could cost the price of a claim and the legal work in the long run. In effect it could be a very expensive, redundant piece of paper.
IT companies and the services they offer are not easy to categorise, largely due to the wide range of business and industrial environments in which IT professionals work.
Consideration also needs to be given to the geographical exposure that a risk presents. For an IT consultant specialising in hardware or software sales in the UK with no overseas exposure, UK territorial limits and UK jurisdiction maybe fine, however a web developer may well need Worldwide cover for both Jurisdiction and Territorial limits even if he only works in the UK for UK companies as his work will be open to claim throughout the world.
Most policies will provide insurance under several different heads of cover. These are typically Professional negligence, Negligent Misstatement or Negligent Misrepresentation, Failure of Software to be fit for Purpose, Infringement of Intellectual Property Rights, Breach of Confidence, Misuse of Confidential Information, Defamation, Dishonesty of Employees.
Whilst a good policy will provide cover under all of these headings, some basic policies may cover only one or two items of coverage only.
Buying professional indemnity insurance cover is one of the most important decisions that you will make about your business. In a no win no fee world you need to be sure that the professional indemnity insurance cover you buy will protect your business in the event of a claim.
With so many different insurers and so many policies to choose from it can be difficult to know what to buy.