FREQUENTLY ASKED QUESTIONS

Professional Indemnity Insurance, also known as indemnity insurance or PI, provides cover to protect you if claims are brought against you by a client. PI insurance can help to put mistakes right and cover any legal costs if a client alleges you have provided inadequate service or advice.

Many professional bodies require their members to hold professional indemnity insurance and large industries and companies will more often than not, insist that you have adequate PI cover before you are able to undertake work for them.

You should consider Professional Indemnity Insurance if you:

• give advice or offer a professional service that can be challenged
• handle data or intellectual property
• are considered to be a professional, specialist, expert or authority in your field

If you provide a Professional, or in fact virtually any Advice or Service, you will almost certainly need Professional Indemnity Insurance. For example:

• You provide advice and consultancy– Clients can claim compensation if there’s a mistake in the advice you’ve given
• You provide an expert service– In case you make a mistake in designs, plans or calculations
• You handle people’s information– You could face claims if you accidentally disclose data or infringe on a client’s legal rights
• A client insists you have it– Many clients will require that you have professional indemnity insurance in place before you can start working for them
• Your professional body requires it– You might belong to a professional body or industry association where professional indemnity insurance is compulsory

In short:-

1. Legal Expenses
2. Damages awarded against you

Professional Indemnity Insurance provides cover for legal costs and expenses incurred in your defence, as well as any damages or costs that may be awarded, if you’re alleged to have provided inadequate advice, services or designs that cause your client to lose money.

IndemnityInsure negotiates a number for special extensions that broadens the cover our policies provide, for detail please consult the FAQs and sample policy we provide.

This is one of the most frequently asked questions. 
You need to consider what would happen in a “worst case scenario” if your Client decided to institute an action against you or your firm. You need to examine:- 

• The type of services you provide and the impact or consequences of an error,
• Are the services “standard” e.g. “tried and tested” and not proto-type, experimental or untried.
• Do you have adequate resources to meet Clients requirements,
• Do you have to engage or sub-contract any of the services and does the sub-contractor have adequate PI insurance,
• The type of Clients with whom you do business e.g. are they Individuals in the “middle market” or “high net worth” category OR Corporates in which case are they local or foreign based or controlled,
• Do you have a written contract with your Client? If not this potentially exposes you to unlimited liability,
• Are you able to limit you liability in terms of your contract, e.g. to, say, a multiple of your fees ( 2 x fees is generally acceptable).
• Does your Professional Council or Regulatory Body require you to have Professional Indemnity insurance. The FSB/FSCA for example stipulates a minimum of between R 1 million and R 5 million.

In short YES, your policy must be in force when you make a claim. A PI Policy (as well as D&O and Malpractice) provides cover on what is termed a “CLAIMS MADE” basis. 

What does “CLAIMS MADE” mean?

The policy provides cover for “claims made”(and reported to insurers) during the period of the insurance policy only.
A claim or circumstances that the insured was aware of before the policy period would not be covered. Similarly a claim after the policy period has expired would not be covered.
It is therefore of the utmost importance to report matters to insurers as soon as you become aware of them. This could be in the form of a summons, allegations of negligence, threats of legal action or even just verbal criticism. 

Even if you renew your policy any known matters must be reported prior to the renewal. If you intend changing insurers this is even more important.
Once a claim or circumstance has been reported then insurers are obliged to protect the insured even though the policy period might expire and not be renewed. 

The cover under the policy will normally only cover any claims arising from services provided after the inception or commencement date of the policy.

However You do have the option in the quotation form to purchase up to 3 years Retroactive coverage if required for a once-off additional premium. The policy will not cover any claims or circumstances of which you are aware prior to purchasing the policy.

If you have been insured for an uninterrupted period previously and this IndemnityInsure policy replaces another policy that has not previously been cancelled, lapsed or expired then this IndemnityInsure policy will provide the same retroactive cover as your previous policy that this policy replaces – provided there is no time gap between the 2 policies. In the case of Medical Malpractice or cover for Financial Services Providers the maximum retroactive cover is however 3 years.

The commonest definition is “when a person has departed from the conduct expected of a reasonably prudent person acting under similar circumstances” – he may then be accused of Negligence or guilty of a Negligent Act. In law this is termed “Delict”. 

The hypothetical “reasonable person” provides an objective by which the conduct of others can be judged.
The law considers a variety of factors in determining whether the person has acted as the hypothetical “reasonable person” in a similar situation. These factors include:- 

• The knowledge, experience and perception of the person,
• The activity the person is engaged in,
• The special skills required. If a person engages in an activity requiring special skills, education and training the standard against which his conduct will be measured is the conduct of a reasonably skilled, competent and experienced person who is a qualified member of the group engaging in that activity – often an authorised group (by statute of law) such as Lawyers, Doctors, Engineers, Architects, Financial Services Providers and Accountants.

1. Do not make any statements or admission of liability or blame.
2. Contact PIFRS immediately you are able. We will assist you.
3. Do not enter into any correspondence regarding the accusations or allegations – refer the matter to PIFRS. We will deal with it.
4. Try to stay on reasonable terms with the Plaintiff – avoid “road rage”.
5. Do not make reference (to the Plaintiff or anyone else) to the fact that you have “insurance.”

All policies may be cancelled on 60 days notice by you.the insured.

If you wish to cancel or spot an error, or need to make an amendment please login to the your account link on our web site and make the necessary amendments; amendments can also be made throughout the policy period.

Not at this time. Indemnity Insure must be paid in full at inception (time of binding) by credit card. We are looking at offering other options in future.

However you may also choose a budget option on your credit card