Negligence is a daunting nightmarish term and highly unnecessary too. Interim Management Professionals dread these terms and dread even more having to accommodate them in the middle of their interim careers. Professional indemnity insurance policies are a necessary requirement for the professional Interim Manager. There are many heads that are covered, negligence being the best known. Breach of duty, civil liability, and loss of information or records, intellectual property disputes...various professional indemnity insurance policies offer various permutations and combinations of each one of these heads for their clients. A client can sue his lawyer if papers regarding 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 designers as well as those within the IT and other industries. It may be that you'll be required by a professional body to take out a certain degree of cover. And often in daily business that some large organisations won't work with you unless they have seen evidence you have adequate PII cover. This is particularly true if you try to win business from public sector bodies. These policies typically offer an indemnity for claims made by your clients for loss they have suffered a result of negligence that has occurred within your work. So, just to illustrate, for those who have made an error in the design of a building and it collapses, the client could sue you for this 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 the negligence scenario. It does not cover claims from customers for private injuries sustained on your premises, or the task-related illnesses of your employees, for example. If you don't already have cover for these risks, you may need to talk to 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, in the event you design shopping centres for a living, you may need more cover than someone who designs individual residential houses, since the sums involved are larger. As with other insurances, providers assess the risks of providing your cover when deciding just 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. Search for the extent of the excess relating to the professional indemnity insurance policy. The excess is a portion relating to claim that won't be met through the insurer which you, the insured, must pay before receiving settlement through the insurer. Consider your claims history and the value of the projects you work on to consider what could be an appropriate excess for you. Also, check the terms and conditions fully. Professional indemnity insurance claims usually are not, as is usually assumed, solely the experience of those who churn out work containing technical deficiencies. They extend to cover situations during 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 guard their assets against claims. This is certainly partly achieved by maintaining professional indemnity insurance cover but providing the terms of coverage are suitable and also 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 that 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 happen to be a specialist interim manager you might usually be asked by a service provider for evidence of £250k of Professional Indemnity as a minimum before commencing an assignment.
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A review of Specialized Indemnity Insurance and the necessity for Interim managers and Consultants to maintain suitable cover
Professional Indemnity Insurance for Consultants and Interim Managers Beacon Interim Management, provider of specialist Interim managers for the Public and Private sectors
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