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How much professional indemnity cover is required?

Posted on July 23, 2011 by Comments are off

How much cover is required?

Only the professional can assess the amount of cover appropriate to the business. In determining how much cover to effect, it is important that a realistic view is taken of the potential damages and legal costs for which the business could become liable. Being under-insured can be almost as financially disastrous as being without insurance at all – as the examples below reveal.

We recommend that no insurance policy is taken out with a limit of less than £250,000. We will, however, provide a quotation for lower levels of indemnity if asked to do so. We are also able to provide cover up to a limit of £10,000,000 in most cases. Any professionals in doubt about the amount of cover they should take out should consult their legal advisers.

The following examples highlight the dangers of being under-insured.

Case 1 – It was alleged that surveyors were negligent in their valuation of a property on behalf of a lender.
Loss: £1.5m
Insurance: £1m
Case 2 – A consulting engineer designed a roof which proved to be defective..
Loss: £350,000
Insurance: £100,000
Case 3 – A design consultant provided designs for tools to be used in manufacturing process. It was alleged that the designers were inaccurate..
Loss: £150,000
Insurance: £100,000
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