According to the financial site NimbleFins, the cost of professional liability insurance for a business or professional ranges from less than Â£ 50 per year to tens of thousands of pounds per year or more.
The cost of PI insurance quotes may also depend on the current book of an individual insurer. That is, underwriters manage the risk for themselves in part by limiting exposure to certain sectors, or by not becoming overexposed to certain risks. Therefore, if they have purchased PI coverage for many companies working in a similar industry, they may decide to take a break and temporarily not purchase more insurance for that industry.
This may mean that an insurer will simply not offer a price, or if it does, that its premiums are significantly higher than expected, or higher than those of its competitors in the market. In the case of the Grenfell disaster, many insurers withdrew from the IP market for architects and construction companies, resulting in a tough market. This resulted in a decrease in the number of insurers offering coverage for these industries and, where coverage was available, higher premiums. Insurers who could offer coverage in this case would increase premiums to compensate them for taking that higher risk.
The best way to find a discount on professional liability insurance in these cases is to find a reliable broker to help sort out the compensation for certain risks at the best price, as well as to contact the insurance companies that work directly with them. customers.
Factors Affecting PI Insurance Premiums
Professional liability insurance underwriters use a variety of factors when pricing risk to determine the premium for a policy. This may include:
- Industry (e.g. architecture, law, accounting, design, finance, etc.)
- The type of work performed (e.g. mergers and acquisitions consulting, design of high-rise apartment buildings, etc.)
- The size of the business (e.g. turnover, number of employees, etc.)
- The size of individual customer contracts
- The experience of business leaders and managers
- Any history of previous claims
- Level of protection required (e.g. policy limit of Â£ 100,000, Â£ 1,000,000, etc.)
- Geographic coverage
The cost of IP insurance can be as low as around Â£ 45 for a sole trader or freelance in a relatively low risk industry like consulting or accounting. However, PI insurance costs can easily reach thousands of pounds per year for large companies, especially those engaged in more risky work such as architecture and construction, finance and other work where an error or negligence could result in significant loss to a customer.
For example, a construction company engaged in multi-million pound projects will pay towards the higher end of the cost range for PI insurance. And architects will usually pay more because a mistake in their work can cost thousands or even millions of pounds to correct a mistake (for example, having to demolish and rebuild a structure if a design flaw means a building doesn’t. is not sure or does not meet specifications). Meanwhile, tax advisers, financial advisers or insolvency practitioners could also make mistakes that are worth a lot of money, or that could cause a client to break the law.
Ultimately, insurers will want to get an idea of ââhow much money a policyholder could cost a client if bad advice is given or in the case of other negligence. In other words, how much will it cost to correct an error or a situation where a client perceives a financial loss due to professional advice, service or design.
What PI insurance coverage is needed?
The cost of IP insurance is in part determined by the policy limit. But what coverage is really needed? It varies enormously from company to company and ultimately it is up to the company to decide.
First, check if a certain minimum amount of coverage is required by clients or industry organizations. For example, lawyers, accountants and financial professionals must all meet certain minimum levels of professional indemnity coverage according to their respective organizations.
Second, consider the following questions:
- What is the maximum compensation that could be awarded to a client in the event of error or negligence? That is, how much money would a mistake cost a customer to fix?
- What is the size of customer contracts? Larger contracts can mean greater financial loss for a customer if something goes wrong.
Also, in addition to the compensation claims limit, consider the legal fee limit, which is the amount of funds available to pay for legal defense in the event of a claim, whether valid or frivolous.
Many companies find it difficult to answer these questions on their own. In this case, it may be helpful to work with a broker who specializes in commercial insurance or to speak directly with an insurance company. They should be able to help a business decide on the appropriate level of coverage.