Errors or omissions that are made when giving advice are covered by Professional Indemnity Insurance.
Traditionally this cover has always been required by professionals such as accountants, solicitors, surveyors and financial advisors for the advice that they provide. However today more and more trades also need this cover for the certification of work they do, for example electricians, gas engineers or those involved with design and construction.
Careful attention is required for this cover to ensure a suitable indemnity limit is selected and that the ‘claims made basis of settlement’ is explained. For example a claim for financial loss made today for incorrect advice given five years ago would be covered by the insurer on cover today. This means even if you cease trading you may well still need insurance.
Directors & Officers / Trustees Indemnity
This cover provides protection for the personal liability of the directors and/or senior management should they commit or it is alleged that they committed a wrongful act or breach of duty in their position as a decision maker within the organisation. The same principals apply for trustees in a charity or officers in a club.
Claims examples include the health and safety executive or heirs bringing legal action after an accident resulting in a fatality. The action is brought both against the firm and the individual directors or trustees for failing to provide adequate training and supervision.
Another claims example is if an audit of financial records discovers a grant was given to a business which wasn’t legally entitled to it. The organisation and trustees face a claim for breach of duty and the return of the funds.
With the ever increasing amount of litigation it is particularly important that this cover is in place and premiums can start from under £100 for smaller organisations with low indemnity limits.
Commercial Legal Expenses
There are several sections of cover under this policy which for most firms is relatively cheap but you must check that the cover provided is what you need as there can be conditions and restrictions.
Employment Disputes cover usually requires you to have contacted the insurer first to ensure you follow the correct procedures, especially when concerned with unfair dismissal. It is possible to be taken to tribunal even for not interviewing someone if it is alleged that this was due to discrimination, so you must keep clear records.
Tax Protection covers you from investigations into your PAYE, VAT disputes and in-depth tax investigation. Aspect enquiries are also sometimes covered but often with lower limits of indemnity and an excess.
Contract Disputes is another key area of cover. Should a customer or supplier fail to perform their part of the contract legal costs are covered to settle the matter. This cover sometimes has a lower indemnity and has several exclusions and restrictions so the policy should be carefully checked.
Property Protection, Legal Defence, Bodily Injury and Data Protection cover can also be included.
Lastly for property owners, specialist cover for Rent Protection and Guarantee should be considered although onerous conditions on tenancy referencing normally applies.
Financial crime, normally in the shape of theft of money by an employee, is not covered as standard on most insurances as individual consideration is needed for each risk.
The amount of money each employee handles, the supervision and background checks are all important factors. The most likely claims are either a sudden disappearance with a large amount of money or small amounts going missing unnoticed over a long period of time.
If you have trade creditors that owe you large amounts of money you may wish to insure them or all of your creditors in case they go bust and you are left with a bad debt.
Sometimes this has a knock on effect and in turn brings the downfall of several firms in a chain of debt.
Today most goods or materials are imported and it is not always clear when your responsibility starts. Should a cargo ship sink with your imported goods on board will you be able to recover the full value and how quickly will this happen?
We recommend that you insure goods being imported and together with sold items so that you are in control of the cover and claim. Cover is normally wide although certain countries need careful consideration due to the local infrastructure or crime.