A number of factors will affect your limit of liability, says Umesh Puri, associate director of the professional indemnity division of Howden Insurance Brokers.
Factors ranging from the way in which your terms of business are structured to the nature and value of products you are advising and to the structure of your business will impact your liability.
To better understand your liability, Mr Puri says you should seek the advice of a lawyer.
When it comes to what professional indemnity cover protects your firm against, Mr Puri says broadly speaking the insurance indemnifies a business or individual against claims made by a third party (generally a client) suggesting they have suffered a loss as a result of non performance, breach of contract and/or negligence, as well as other exposures such as libel, slander and even dishonesty/fraud (in respect of dishonesty/fraud the offending party is not of course indemnified) incurred in connection with services or advice provided by the business or individual.
In addition to indemnifying a business or individual against claims made by a third party, Mr Puri says professional indemnity insurance will cover legal and other costs and expenses in the defence of any claim covered under the policy.
With increasing concerns regarding data loss exposures, Mr Puri says firms who are relying on their professional indemnity cover for additional cyber liability cover should ensure they understand the limitations of cover in this respect.
He says firms would be best advised to compare the cover offered with that afforded by a stand-alone cyber liability policy.
Mr Puri says advisers should also take note that as professional indemnity policies are written on a “claims made” basis, the policy will only cover claims notified during the policy period, regardless of when the work was undertaken.
He says the FCA requires that a policy must offer fully retroactive cover all the way back to the FCA authorisation date.
If a retroactive date is specified, Mr Puri says it is important that this meets all your cover requirements and does not expose you to an uninsured period.
