Professional Indemnity Insurance a necessity for the Interim Manager
Negligence is a frightening nightmarish terms and highly avoidable too. Interim Management Professionals dread these terms and dread even more having to deal with them in the course of their interim careers. Professional indemnity insurance policies are an essential requirement for the professional Interim Manager.
There are several heads that are covered, negligence being the best known. Breach of duty, civil liability, and loss of data or records, intellectual property disputes...various professional indemnity insurance policies offer various permutations and combinations of all these heads to their clients. A client can sue his lawyer if papers pertaining to his case have been misplaced. In which case professional indemnity insurance kicks in and the insured interim manager is safe from damages.
Professional indemnity insurance (or PII) is a policy that is available to providers of professional services. Professions that come to mind include solicitors, accountants and architects as well as those in the IT and other industries.
It may be that you are required by a professional body to take out a certain level of cover. And you may find in day to day business that some large organisations will not deal with you unless they have seen evidence that you have adequate PII cover. This is particularly true if you are trying to win business from public sector bodies.
These policies typically offer an indemnity for claims made by your clients for loss they have suffered due to negligence that has occurred in your work. So, for example, if you have made a mistake in the design of a building and it collapses, the client could sue you for the loss he has suffered as a result. Claims can be made for negligence due to your acts (like the wrong design); omissions (like an accountant filing a tax form late); libel and slander.
Professional indemnity insurance deals with a specific set of circumstances in a negligence scenario. It does not cover claims from customers for personal injuries sustained on your premises, or the work-related illnesses of your employees, for example. If you do not already have cover for these risks, you may wish to consult with your insurance provider about further policies.
Premiums are usually based on the value of the transactions and projects that you work on. So, going back to the architect's example, if you design shopping centres for a living, you may need more cover than someone who designs individual residential houses, as the sums involved are larger. As with other insurances, providers assess the risks of providing your cover when deciding how much you should be charged. So a firm with an unblemished record may pay less for their cover than a firm who regularly claim on their insurance.
Look for the level of the excess on the professional indemnity insurance policy. The excess is a portion of the claim that will not be met by the insurer and that you, the insured, need to pay before receiving settlement from the insurer. Consider your claims history and the value of the projects you work on to decide what would be a suitable excess for you. Also, check the terms and conditions fully.
Professional indemnity insurance claims are not, as is commonly assumed, solely the experience of those who churn out work containing technical deficiencies. They extend to cover situations in which consultants probably did nothing wrong but the client made a loss and decided to attack all potential sources of compensation; or the contractor made errors and subsequently went into liquidation; or there were so many parties involved, all with different versions of events, that criticism of the consultant was an inevitability.
All consultants, therefore, need to protect their assets against claims. This is partly achieved by maintaining professional indemnity insurance cover but only if the terms of coverage are suitable and the limit of indemnity is adequate.
All practices, even those with clean claims records, should review their limit of indemnity as a matter of course at each renewal and increase it if appropriate. The incidence of claims exceeding the limit of indemnity is already much higher than it used to be and is a trend which is set to continue. Consultants whose liability exceeds their insurance have to fund the balance out of their own assets to the extent they can.
If you are a professional interim manager you will usually be asked for £250k of Professional Indemnity as a minimum
professional indemnity insurance from Beacon Interim Management the uk's sector leading provider for service and assignment support.
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