How Do You Work Out Your Professional Indemnity Level Of Cover?

Professional Indemnity Insurance is different to other types of insurance in the sense that you will be given a range of limits to choose from rather than being given a standard limit of cover (the maximum amount your insurer will pay out). Below we have outlined three ways in which you can work out how much professional indemnity cover your business requires.

Option One – Check With Your Client

If you’re undertaking a contract for a specific client, they may well have specified a minimum amount of cover required for you to undertake the contract. In this case, you can simply choose this level of cover when purchasing your policy in order to meet their requirements (but please see Option 3 below which may mean that this level of cover is not adequate). However, if they’ve specified that you need to have professional indemnity insurance but have not stated a limit, it may be worth checking with them how much they would consider acceptable before you buy.

Option Two – Check With Your Industry Body

Within industries such as accounting, surveying and engineering, you may be a member of an industry body that may require you to hold a minimum level of cover in order to be a member. The minimum cover requirements are usually detailed in your membership agreement. However, if you’re unsure or the information is not detailed in your membership agreement, speak to your industry body directly to find out.

With the above two options, note that these values are minimum requirements, so you may decide that your business needs a higher level of insurance. When you are deciding how much to buy, you should think about the type of work you do and the size of your contracts and the potential for things to go wrong. Remember the possible cost of a compensation claim if you were to make a mistake in your work.

Option Three: Decide For Yourself

You may decide that you would like to decide for yourself the most appropriate level of cover for all the work that you undertake. If this is the case the best way to choose your limit of cover is to consider a worst case scenario and how much you think it would take to put right. For each project that you are working on, take into consideration:

    • The size and value of the project you are undertaking – for example are you an architect working on residential properties or are you working on large commercial properties or high rise buildings?
    • The cost of getting a third party to rectify a serious mistake you’ve made – depending on the type of work you do; this could be very costly in itself.
    • Any consequential losses your client would incur as a result of your mistake – i.e. lost sales or missed business opportunities
    • Any legal fees incurred by your client in pursuing you
    • Any damages or compensation due to your client – usually decided by the courts unless a settlement is agreed

Do You Need A Quote For Professional Indemnity Insurance?

John Heath Insurance Brokers can offer varying levels of professional indemnity cover. In order to obtain your quote, simply start your professional indemnity online quote via our website or call a member of our team.