The following article is a guest post by our friends at Markel. The idea of an umbrella policy, whether for an individual or a business is something one should consider, especially when one’s net worth starts to grow. I personally carry an umbrella policy, that can kick in if needed to fill the gaps left open by other policies such as my auto insurance policy.
My recommendation is to study the topic of umbrella policy thoroughly prior to making a decision to acquire one. There may be personal finance “experts” that tell you to cut back on insurance because you are over insured and paying too much. However, I personally believe that one can never be too insured. The key is to find the best balance possible between how much insurance you need and how much you are willing and more importantly able to pay for.
Professional indemnity insurance is a type of policy that protects the holder against any claims of negligence or mistake that causes loss to a third party. While there are many types of policies that are considered to fall under the umbrella of professional indemnity insurance, they cover businesses against similar things. Many professionals make the decision to purchase professional indemnity insurance, but some are required by law to ensure that they have this type of coverage.
Policies that are considered professional indemnity include errors and omissions, malpractice and professional liability insurance and the type you should purchase depends on your industry. These policies are popular among businesses that offer any kind of advice or recommendation as part of their services, such as web designers, accountants, lawyers and accountants.
There are numerous benefits out taking to this type of cover, including the transference of responsibility for paying any winning claims. This type of cover will allow the insurers to act on behalf of the company and they will carry out an investigation of their own to ensure everything is seen to fairly. Legal costs are also covered and the policy will protect any members of staff, contractors and others working on behalf of the company.
When purchasing a policy, insurers take a few factors into consideration. Things like type of business, location and claim history for both the organisation and the profession as a whole will all add to any hypothetical premium prices. Cover limit is important as companies will be liable for any costs exceeding the cover limit.
Without a professional indemnity policy, companies will be responsible for paying any damages awarded in a lawsuit as well as their own legal costs – this could run into thousands and would be time-consuming to boot. Best to have it and not need it than need it and not have it.