Professional indemnity insurance is really important if you are providing paid advice, designs or a service to your clients. Professional indemnity insurance can defend you or compensate your clients from any financial loss resulting from your negligence. Professional Indemnity cover provides protection against civil liabilities arising from a professional service provided by you in respect of your business.
This can include:
With every business occupation different, a tailored Professional Indemnity policy can be negotiated to suit the risks associated with your business occupation, it is not uncommon to have additional endorsements and amendments on an insurance policy to suit your particular business requirements. Speak to us at Fully Insured about Professional Indemnity Insurance.
When the policy provided is taken out, for Professional Indemnity you may hear the term “claims-made basis”, which means prior history become an important consideration. If an Insurer is not willing to provide coverage for previous, unknown events that may have occurred prior to the policy inception, the tool used to limit this exposure is the retroactive date limitation.
If a policy is written with an effective date of 1st January, 2005 for a business that has been trading since the year 2000 without a retroactive date, the policy is activated for any incident that is reported during the policy period ie after the 1st January, 2005, regardless of when the incident occurred. Adding a retro date to the policy is comparable to building a fire wall. When the insurer adds a retroactive date to the policy that is the same as the inception date of the policy, the policy will respond only to claims that are reported during the policy period if they occurred after the policy was written ie. in the case above, only errors committed after the 1st January, 2005 would be covered.
A claims-made policy that does not have a retroactive date or an unlimited retroactive cover is better for the insured because there are no restrictions on when the wrongful act must have occurred. For coverage to apply, the claim must be made after the policy inception, regardless of when the incident occurred. Such a policy still does not cover incidents that are known at policy inception and could give rise to a claim in the future. These must be disclosed on the application and are not covered.
An insurance policy without a retroactive date is advantageous to the insured from a coverage point of view however as a result, the insured can expect to pay more for the coverage. Most professional liability contracts do include a retroactive date which caps how far back or a limit of cover. previous . When a client cannot obtain unlimited retroactive coverage, the retroactive date should be set as far back as possible.