Professional Indemnity insurance can be a difficult concept to get your head around, as it protects you from claims of negligence. Unlike many types of other insurance, such as car or property insurance, there’s no physical asset to cover. Therefore, there is no tangible value or definite, potential loss to consider. This means that it can sometimes be difficult to see what the price of your professional indemnity insurance quote is based on.
The Real Cost Behind Your PI Quote
Businesses can face a claim without having done anything wrong, so what you are purchasing is financial protection and a strong defence. Whilst it may be rare that you actually are negligent, and also even less rare that you may be accused of it, once things go wrong, they can go wrong in an expensive way. A business can usually handle small issues and everyday mistakes, however big claims – claims that can destroy your business – are worth protecting against.
A worthy claim against you, by its nature, is going to be a very serious matter. It is likely that something may have gone spectacularly wrong, and it will take an insurer time, effort, expertise and money to put it right. This obviously has a hefty cost. The price that is charged is both a reflection of the risks your business faces (an assessment based on yours and your industry’s past claims) and a rough estimate of how much a claim will cost them.
Despite the rarity of claims, businesses are on the receiving end of actual and potential claims every day and they cannot be ignored. If you don’t have insurance, solicitors are not cheap and it is unlikely that you’ll have the time or the legal expertise to defend yourself. Alongside this, you could be faced with a big compensation bill.
This is where your professional indemnity insurance comes in. In exchange for a premium, you will receive the specialist protection of an expert, an experienced insurer, and it is hard to put a price on that.
If you would like to discuss obtaining a professional indemnity insurance policy, call us today to speak to a member of the team.