Professional Indemnity for Insurance Brokers and Their Clients

A missed deadline. An unforeseen complication. A miscalculation. One small mistake can snowball into a bigger problem. If this mistake arises in the course of professional services, and if it causes financial loss for the client, a lawsuit might result. For this reason, Professional Indemnity insurance provides essential coverage.

An Insurance Broker’s Perspective

As an insurance broker, you understand how important diligence is. Your clients count on you to provide the information they need to make sound financial decisions. If you fail to advise them of a key issue, they may blame your omission for subsequent losses. Problems can also arise if an error is made on your part. You forget to file an application on time, or you send it to the wrong place. These things happen – but if they result in problems for your clients, these things may lead to lawsuits.

In reality, however, a lawsuit doesn’t even require an error or omission on your part. It just requires the client to perceive that an error or omission has occurred. Hopefully, your diligent recordkeeping will prevent unfounded lawsuits from getting very far, but the defense costs may still be significant.

This is why Professional Indemnity insurance is important. It’s not just important for insurance brokers, however; it’s also important for many of your clients.

Professionals Who Need Professional Indemnity Coverage

Professional Indemnity insurance is appropriate for professionals working in many fields. The following list contains a few examples of professionals who may need Professional Indemnity insurance:

• People who manage financial accounts, sell financial products or provide financial advice, such as accountants and insurance brokers.
• People who offer expert advice as consultants.
• People who offer services in the architectural, engineering, design or construction industries.

This list is by no means exhaustive. If your clients provide professional services or advice to clients of their own, and if an error or omission could result in financial loss for those clients, Professional Indemnity is likely appropriate.

Key Considerations When Purchasing Professional Indemnity Coverage

Professional Indemnity insurance covers a wide range of industry types, and the coverage needed will likely vary from profession to profession. It’s important to look at what’s covered, what’s excluded, and what the limits are.

It’s also important to consider issues of geography and jurisdiction. Today, work is rarely limited to national borders. You might not think twice before accepting an international client outside of the EU. If a lawsuit arises, however, being in a different country – and being subject to a different legal code – can become an issue.

Professional Indemnity insurance may provide coverage for business dealings involving clients in other countries, but there will likely be restrictions. For example, even policies that offer global coverage may exclude certain countries, most notably Canada and the United States. It’s important to read the policy details regarding this carefully and to consider whether additional coverage is needed.

The Insurance Climate

The E&O line is growing rapidly. If you have not been offering this coverage to your clients, now is a good time to start.

“The E&O market is maintaining rate in a number of areas and we are seeing an increase in submissions across multiple disciplines,” says Costero Vice President, Danny Cooper. “The E&O sector has been a key area of growth for Costero over the past year, as we are able to utilise our E&O facility and strong open market relationships to provide solutions to our clients,” he adds.

For guidance and to access coverage from a variety of insurers, contact the Professional Indemnity professionals at Costero Brokers.