subject: Professional Indemnity Insurance - Why Is Retroactive Cover Important? [print this page] Professional Indemnity Insurance - Why Is Retroactive Cover Important?
Whether you're a freelancer, a self-employed consultant or a professional practice firm, you're probably already aware of the need for professional indemnity insurance, or pi insurance as it is often referred to. It's designed to provide you with financial protection if a client makes a claim against you, alleging loss or damage as a result of your negligence.
So you might be thinking that if you take out some professional indemnity cover today, everything will be alright.
That depends.
Because there can often be a significant time lag between a professional mistake being made and the consequences of that mistake being felt.
For example, a consultant engineer might design a roof which he claims will withstand the weight of a certain amount of snow. But it's only when that amount of snow actually falls that it becomes apparent that he made an error in his calculations.
Or take the case of an IT contractor who designs a system with the flexibility, so she states, to accommodate the client's future expansion. Again, it's only when the client's business does expand, and the number of system users grows, that it turns out the system wasn't that flexible after all.
In either case (or, indeed, in any similar case relevant to your particular profession) the simple fact of having a pi insurance policy in place at the time the mistake came to light, would not, in itself, provide any protection. The policy would need to provide you with cover for when the mistake was actually made.
But is it possible to insure yourself against the consequences of something you might already have done?
Fortunately, it is. By ensuring that retroactive cover is included in any professional indemnity policy you take out. And, indeed, only by doing so will you obtain the true peace of mind that professional indemnity insurance is designed to provide.
That's why retroactive cover is so important. To find out more, call 0870 752 5455 or email info@professionalindemnityinsurance.co.uk.
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