Professional Indemnity Insurance

Professional indemnity insurance is required for certain regulated professions, depending on industry rules and governing bodies. In many cases, professionals take out professional liability insurance in South Africa to manage risk even when it is not legally required.

There is no standard cost for professional indemnity insurance. Premiums can vary significantly depending on factors such as your profession, the services you provide, turnover, claims history, required limit of indemnity and the insurer's assessment of the risk.

A broker will generally need information about your practice and activities before an appropriate premium can be determined.

Professional indemnity and public liability insurance protect against different types of risk.

Professional indemnity insurance is concerned primarily with liability arising from professional advice and services. Public liability insurance generally relates to claims involving third-party bodily injury or property damage arising from business activities.

Some businesses may require both forms of insurance because they address different exposures.

The appropriate limit of indemnity depends on your individual exposure. Factors can include the type and value of work you undertake, the potential financial consequences of an error, contractual requirements and any minimum cover required by a professional or regulatory body.

Higher limits are not automatically appropriate for every practice. The aim is to understand the potential exposure and arrange a suitable level of protection.

A claims-made policy generally responds to claims first made against the insured during the period of insurance, subject to the policy's terms, conditions and retroactive provisions.

This makes timely notification particularly important. If you become aware of circumstances that could lead to a claim, your policy may require you to notify the insurer even though no formal claim has yet been received.

A retroactive date determines how far back your policy may provide cover for work performed before the current policy period, subject to the policy terms.

It is an important consideration when taking out PI insurance or changing insurers, particularly for professionals whose previous work could give rise to a claim at a later date.

A reportable circumstance is an event, complaint, problem or other situation that could reasonably be expected to lead to a professional indemnity claim.

What needs to be reported and when will depend on the terms of your policy. If you are uncertain whether something should be notified, it is generally better to speak to your broker promptly rather than wait to see whether a formal claim develops.

Yes, but changing insurers needs to be handled carefully. Because many PI policies operate on a claims-made basis, matters such as your retroactive date, previous notifications, known circumstances and continuity of cover can be important.

Your broker can help you compare the proposed cover with your existing policy and identify issues that need to be considered before changing insurers.

Potentially. A claim can arise after the professional work that caused the alleged loss was completed. Professionals retiring, closing a practice or moving into a different field may therefore need to consider run-off cover.

The period and level of run-off cover required will depend on factors including your profession, previous work and any applicable regulatory requirements.