Professional Indemnity Insurance Flashcards
(13 cards)
What is PI insurance
Professional Indemnity Insurance
Commerical policy designed to protect business owners, freelancers and self employed if clients claim a service is inadequate
What is Run off cover
Covers historic liabilities of a business and its directors when the business ceases or is auired
If you were to cease trading, what level of run off cover would you put in place
6 Years underhand
12 Years deed
PII in aggregate vs on each every claim basis
Aggregate (more cost effective but could leave you exposed)
Total limit of indemnity is max insurer will pay out over term
Each every claim (more cover but comes with higher premium)
Full limit of indemnity available for each individual claim during term
Minimum limit of indemnity
Firms turnover preceeding year = Minimum limit indemnity
£100k less = min £250k
£101 to £200k= min £500k
£201 above = min £1mil
Maximum level of uninsured excess
Turnover = Maximum uninsured excess
10M or less = Greater of 2.5% of sum insured or £10k
10.1M or above = No set limit
PII Requirements
- Each every claim basis or aggregate with round clock reinstatements
- Min levels indemnity
- Max level uninsured excess
- Fully retroactive
- Underwritten by RICS insurer
- Cover past and present employees
- Run off cover
Has RICS publushed info on PII
UK Professional Indemnity Insurance Requirements
Purpose of having PI insurance
- If firm faces claim, its protected from financial loss it cant meet from its own resources
- Ensures firms clients dont suffer financial loss, which firm cannot meet
Measures taken to avoid PII claims
- Keep record of meetings and conversation
- Record advice given
- Use proper letters of engagement, appointment contracts
- Avoid providing advice outside expertise
- Follow RICS professional standards and practice information
- Follow RICS rules of conduct
- Follow company procedures
A friend asks for help on house extension and they ask for technical advice for free outside of work, what do you do
- My firms PII would not cover me so decline
- Potential conflict of interest
- Suggest friend contacts firm to discuss formal appointment
When would you recommend aggregate or every claim basis (PII)
Aggregate
Low risk business
Low value contracts
Can self insure portion of risk
Each every claim
High value contracts
High potential for large claims
Full protection from multiple claims
New PI Insurer requirements
- Fire safety coverage (building above 4 stories)
- External wall surveys
- Fire risk appraisals of external walls
- Cyber exclusion cause - removes cover based on cyber attacks
