Cheap Indemnity Insurance
As the recession bites, more and more professional people are trying to reduce their annual insurance premiums down, by searching for a cheap indemnity insurance policy. As no two professional indemnity insurance policies are quite the same, it can be quite tricky to compare the relative prices of two separate insurance policies. One policy may be cheaper than another, yet each policy will have similar core covers but the terms might be slightly different. It doesn’t always follow that the higher the premium, the greater the comprehensive is likely to be. Of course, you should always take professional insurance advice, regarding which indemnity policy is appropriate for your insurance needs and requirements. This policy comes with little or no optional extras. So it can be tricky to find areas to cut back that may impact price. So you should always buy an indemnity policy, based primarily on the insurance needs of you and your business – rather than choosing a product based purely on how cheap it is.
In practice, the easiest way to get a cheap indemnity insurance quotation, is to ask the insurance company or the insurance broker, to increase the policy excess level. In the event of an insurance claim, the excess represents the first portion of the loss that you as the customer would have to pay out of your own pocket. Legal or compensation costs over this agreed excess level, would then be paid for by the insurance company. Most policies have a standard excess level included in the policy wording. This normally ranges from between £1000 and £2,500 pounds. Make sure you ask the product provider for the total amount of excess you will have to pay as voluntary and compulsory excesses are added together.
When comparing prices of quotes, you will have to make a business judgement about how often you are likely to make an insurance claim, and what the potential costs of the claim would entail. Most claims for compensation are settled out of court, and are paid following protracted arguments and disputes between the parties. If you know you are clearly at fault and do not intend to challenge the claim, your indemnity insurance policy may suddenly have enormous value. However, remember that the cheaper a premium is, it may possibly be due to the fact that it may extra terms and conditions. When thinking about the disaster scenarios, sometimes it can be a ‘false economy’ to cut back to the point, where you are sacrificing cover just for a slightly lower price.
In general terms, occupations, trades and businesses operating in high-risk sectors, will generally have to pay more for their professional indemnity insurance. For example, if you run a offshore drilling consultancy, it is probable that you will find it difficult to obtain cheap indemnity insurance. This is because a proven act of negligence, mistake, error or omission in your advice, could result in huge claims. Whereas, an architect or a surveyor is deemed by insurers, as a relatively ‘safer risk’, occupation or profession. In this example, the cost of claims and the likelihood of claims occurring, can be more easily calculated. Indeed, insurers base the price of their indemnity policies, primarily around the risks associated with the type of work being undertaken. So although you cant change what you do (just to get some money off your premium) – the more information you can provide your broker or insurer, the less uncertainty and question marks will surround your insurance quotation.
Always read the Policy Wording and Key Facts document very carefully, before agreeing to take out a policy. In particular, you should make yourself aware of what will happen in event you need to make a claim. As soon as you are aware of a potential problem, you should contact your insurance company at the earliest opportunity. By its very nature, a professional indemnity insurance claim is likely to be very serious. It will require careful consideration by your insurance company’s solicitors at the earliest opportunity. So contacting your insurance company as early as possible will ensure, they can act on your behalf without being compromised by any promises or commitments you may have made during any prior negotiations. This is known as defined subrogation rights. This could be defined as the substitution of one person in the place of another with reference to a lawful claim, so that he or she who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies.
Lastly, remember that the price quoted for an indemnity policy may vary, according to a number of ‘economic and structural’ reasons as well. Many insurance companies operate in different markets, with different marketing resources, using different sales channels. This may very well be reflected in the price they set in the market. Many insurers take a long-term strategic view of the professional indemnity market, and will offer incentives at renewal time to maintain the ‘book of business’. Conversely, many new start-up insurers may want to offer extremely low prices in an attempt to enter, what is a very profitable and fast-growing market. So, if you are doggedly hunting down the cheapest policy you can find, comparing prices online is an obvious starting point. However, you may find it much harder to compare prices using comparison search engines for professional indemnity policies. This is because most insurers require quite a bit of information from client, before they can actually provide a quote. This may include, details of your clients, the markets in which you operate, and whether you have had any claims in the past.
As a result, you will probably have to complete a number of online quote request forms, or speak to a number of brokers or insurers on the telephone. This will give you a range of quotes to compare. It will also give you the chance to ask the questions are important to you. You will be able to test the elasticity of their quote model. The broker may even give you different quotations based on understanding of your needs and requirements. Always ask for a discount just based on their goodwill! Lastly, you must disclose any material facts this quotation point. Failure to reveal something you should have done during the quotation phase, (just to secure a cheap quote), may invalidate any future claim from being paid out.
If you like to see if we can provide you with a quote for cheap indemnity insurance, please give us a call or fill out our online quote request form above.
Here is a sample list of occupations we can provide cover for: