Professional Indemnity FAQ

Start ups at risk from lack of Professional Indemnity cover

Many new consultants appear to delay purchasing professional indemnity (PI) insurance for an average of six months after setting up their business, according to recent research.

The survey also found that 39% of respondents did not purchase PI cover until at least three months after they had been in business. A further 20% waited two or more years until they purchased the insurance. Many that take cover only do it because of contractual requirements with certain clients that include these arrangements as part of their own Risk Management process.

According to the research, half of the respondents recognise the importance of professional indemnity insurance by purchasing cover immediately. Accountants however proved themselves the most keen to purchase cover with 90% buying PI insurance straight away and the remaining 10% purchasing it within six months. However those most at risk from delaying their purchase of PI cover were companies involved with design, engineering or marketing and communications.

It does appear that there is a big difference between industries, with those in more regulated sectors such as accountancy and consultancy likely to purchase professional indemnity insurance from the start. However, the more creative sectors such as marketing and design appear to delay their purchase, which places them at higher risk in the event of a client dispute.

It is disappointing that many businesses will wait some time until they have been in business for some time, before obtaining cover. It is of particular concern that one in five respondents had been in business for two years or more before purchasing professional indemnity insurance. During this time they have been exposed to a considerable risk and will continue to do so if any cover they arrange has a retroactive date from inception of the new policy. The past work prior to that date will not be covered.

Then what do we do about it?

  • All Professionals about to start their own business need to be aware of the risks they take should they make an error or omission in their profession.
  • It is up to Insurance Brokers such as myself to clearly inform as many as people about the risks professionals face.
  • Businesses engaging un-insured professionals under contract for services need to be aware that the consultant is unlikely to have the resources to meet any claim against them and are likely to declare Bankruptcy.
  • Un-insured professionals need to be aware that they can lose all their personal assets, including their home and if they still become a bankrupt will find it a huge stigma and barrier to starting any new businesses.
  • If cost is a barrier, then utilise premium funding and spread the payments over the course of the year.
  • Professionals should be aware, this is their most important insurance cover. Why be in business without this basic protection?

 

So any “Start Up” needs to plan their business. Where they are likely to get business? What marketing and publicity they need? What networks they can draw upon? Also what Risk Management they have. And for a Professional person, any Risk Management programme should include Professional Indemnity cover.

 

If you need help on this, call CPR Insurance Services, experts who will save you!

 



 

  

Latest News

CPR joins Ausure

We would like to announce to all our Clients, Prospective Clients, Suppliers and Insurers, that Cooper Professional Risks Pty Ltd trading as CPR Insurance Services, will be leaving National Adviser Services Pty Ltd (NAS) and joining Ausure Pty Ltd as a Corporate Authorised Representative from 5 March 2018.

Fundamentally, there is no difference to you, except our Invoices will look a little different, and the Banking details will be in a different name and account number. Everything else at CPR stays the same.

There are a number of reasons we have made this decision, but the primary reason is for what we believe is best for our clients.

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Special offer to CPR Insurance clients

Employsure are providing a FREE Business Health Check to all our clients and gives you the opportunity to receive an analysis of the health and safety requirements in your workplace. Also. Employsure  will review your employment agreements as well as your wage rates helping you to avoid workplace claims.

Ordinarily this would cost you at least $1,250 but because you are a CPR Insurance client, it is free!

It involves the following review for you.

SAFECHECK

A specialist Work Health and Safety Consultant will visit your workplace and carry out:

A review of your business’ current work health and safety policies, procedures and systems to identify areas of concern or non-compliance

Following the review, you will receive a report summarising the findings and the health and safety

Status of your workplace

WAGE CHECK

A Wages Adviser will review your rates of pay and produce a Wage Check report.

The review will be conducted against the industrial instrument applicable

A report will be supplied advising if the wages are compliant and what steps to take to achieve compliance

CONTRACT REVIEW

A Document Consultant will review an employment agreement and provide recommendations.

The review will highlight compliance issues with the Fair Work Act 2009 as well as best practice

The report will make recommendations to achieve compliance and provide protection to your business.

This will remove any areas of potential dispute and risk

So what do you have to lose? Contact us on 07 3123 1137 and arrange 

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