Westminster Indemnity Ltd - World leaders in Professional Indemnity insurance

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What is Professional Indemnity Insurance?
In terms of the cover we offer Professional Indemnity, is only a part. The other major form of cover we include is Public Liability. There are still more important elements of a policy - but these two are the principle elements.

Professional Indemnity is sometimes known as “Malpractice”. What it covers is a claim made against you in consequence of something that transpired as a direct result of you practicing your professional following.
Example:
A doctor wrongly prescribes a medicine – you are ill as a result
Public Liability is quite different and covers an event that has nothing to do with you practicing your following – rather an event that occurred because you were, or whilst you were, following your practice.
Example: A client (patient) trips up and breaks a leg while walking on your carpet in your surgery.

What is Public Liability insurance and is it included?

Let us deal with the second part of the question first. Our policy includes Public Liability.

Now to deal with what it is.
Public liability covers a claim made against you by a member of the public, and that means it isn't necessarily a client. On the other hand a person making a claim for professional negligence, of necessity, has to be a client.
For public liability, it could be a client - or it need not be. A claim could be brought against you because, it is claimed, they were scalded by a (too) hot cup of tea, fell over a broke a bone or did anything that gives rise to a claim - where the claimant says it was your fault.
A claim could be for almost anything where there is the opportunity to point the finger at you - but most likely not to do with your professional practice, but as a result of you being where you were, what you did, the premises you occupy while you were about you were on your "business".
Therefore you could even be exhibiting at a show - and your public liability section of the policy protects you there.

Why is it important?
Because none of us know what’s around the corner. A description of insurance made hundreds of years ago – still hold good today – “A way in which the plight of the few falls upon the many”.
Insurance is important because - if a claim were made against you the financial consequences could be ruinous. The premium isn't but the cost of a claim could be.

What are the key dates?

There are five key dates within a Professional Indemnity policy.

Policy start date & Policy end date

The date you first know of a claim & The date on which the incident that gives rise to the claim occurred

The retroactive date

Policy start date & Policy end date
This is the policy term. Usually these dates are 1 year apart, and unless otherwise specified would assume midnight to midnight. You are covered for claims that arise during the policy term.

The date you first know of a claim & The date on which the incident that gives rise to the claim occurred
This pair are again self explanatory.

The retroactive date
Our Professional Indemnity policy is what is termed "Claims made". That means the insurers will consider a claim that they are advised of (and you must tell them at once!) during the policy year. The incident that caused the claim will have occurred in the past. Cover is provided for an incident that occurred AFTER the retroactive date. Our policy has no retroactive date and therefore our policy covers you during the policy terms for an incident that could have occurred at any time in the past.

So, by way of example, if your policy year was 1st January - 31st December 2006 - then if between 1st January 2006 and 31st December 2006 you first became aware of a claim (and it related to an incident say 3 years ago) and advised the insurer then the insurer will deal with that claim, even though the incident that caused the claim happened years ago.

How much does it cost?
The premium is available on the site – tailored to your circumstances.

What should I ask an insurer when purchasing professional indemnity insurance for the first time?

What is not covered.

First we need to get to grips with very slightly different words that can mean very different things, and only apply to Professional Indemnity policies.

Claim arising: Not when the claim is made, but when the incident that caused the claim occurred - it could be years ago!

Claims made Policy means the insurer will consider a claim that is made during the year of insurance. If you always had claims made policies then the insurer in whose year the claim is made - is duty bound to deal with it.

Claims arising Policy means the insurer in whose policy year the claim actually arose - it could have been years ago - deals with the claim.

What is the retroactive date position?
The retroactive date means the date from which claim will be entertained. Therefore it tends to apply to Claims Made policies. Some, like ours, have no actual date and cover claims arising from any time in the past. Others will specify a date.

1 A claims made policy with no retroactive date - or one that is that start date of your business - can be renewed annually and all the time you are covered - then any claim that arises will be dealt with by the current insurer. When you stop work you then need to have "run-off" cover which continues to provide you with cover against a claim that can be made in the future. Clearly "run-off" cover is not required for a claims arising policy.

2 You do not want to be switching between the two without being fully aware of the consequences. If you move to a Claims arising policy from Claims made you could almost wind up with the worst of all possible worlds!

How much professional indemnity insurance should I have?
We offer £1,000,000 or £2,000,000 cover per claim.
Some of our clients have £2,000,000 of cover because their clients insist upon it. Many of our clients believe £1,000,000 per claim is perfectly adequate. Unfortunately there is no correct answer to this question.

Does my professional indemnity insurance automatically cover me when I work internationally?
Depends on the policy. With us, the answer is YES if it’s not USA or Canada and the total overseas work (as measured by income generated) does not exceed 20% of total practice income.

If not, how do I get professional indemnity insurance for different regions?
Well, let’s start by ensuring that we understand what overseas income really is. If you are actually in another country and providing services in another countries, then clearly you are providing a service in that country and will be covered by the laws of that country. If you provide a service from the UK – perhaps by telephone – then that is probably NOT overseas income as the service you provide is delivered from UK.

If you are actually in another country then you need to discuss this with your insurer. This is a difficult area and insurance cover may not be available.

There is no definitive answer to this question as the issue cannot be addressed by a tick in the box operation, and it would be thoroughly impractical to impose precise and prescribed systems on every insured person.

To make a start it helps to look at this from the viewpoint of what happens in the event of a claim. After all – this is what the insurance is about.

Also, and I know this comes as a big surprise to honourable people, spurious claims are made, but no matter how spurious or unlikely a claim might seem the legal system we have will permit the claimant their day in court – under virtually ANY set of circumstances to have their case heard. IF it goes to Court and IF you do not defend it (perhaps because it’s all too spurious and ridiculous!) then you will probably loose the day. Just to get to Court can be ruinously expensive - what with Barristers at up to £5,000 per day!

Insurance underwriters know this and are very aware of the legal cost and consequences and will happily take those expenses on if they deem it necessary.

I know this is a statement of the obvious – but in almost all cases a claim has 4 elements:

1
The claims department need to establish if the claimant actually has the right to make a claim.

The record required is necessary to establish that “A” is actually in a position to make a claim against “B”.

In a court of law it is probably that the Judge will test the “balance of probability” of something.

So if, for example, if the insured is able to show a nice neat system and set of records of what clients they met, when and where and a summary of the nature of the service provided. And those records did not show a meeting with the claimant – and the claimant had no records to show at all, then the “balance of probability” might fall to the insured in that they can demonstrate they did not even deal with that client when claimed – and there is reasonable evidence to support that.

A simple example I know, but I trust this demonstrates the importance of records to establish who the insured met (or talked with), when and where and what happened.

2
Again the issue of a record: This time the service provided. I know many Coaches will say “Well I conduced a coaching session”. But surely you made some notes on the main issues discussed? The main objectives required by the client? These are just basic things and not difficult. You surely do write this down don’t you! Do not tell me you can remember it all – because we all know you can’t.

Have you ever met with a good solicitor? You will find in the background he has notes of the meeting. What time it started – what time it finished – what was discussed and MOST IMPOORTANT what he said that could be construed as ADVICE.

Now Coaches do not work quite like that but there are lessons to learn. Coaches do not provide advice – but if there are difficult issues to address, then in your meeting notes make absolutely sure you note that “this (or that) issue was addressed” and I was very careful to ensure the client was making decisions based on their thinking – not mine.

Again meeting content notes (especially) when there are other examples to show, bring forward a compelling case that you are telling the truth and have a competent recording system. You do not know what the claimant will bring up – and whatever they do – they you must be ready to counter it.

3 The question raised concerning a claim may now be addressed – but only after the insurer has been able to decide if the claimant actually can bring a claim – and the nature of that claim. Then the next range of questions may be addressed:

Now that we have been through the process of a potential claim I trust you will see why it’s important that the insurer has an accurate record of “what went on” with “who” and “when” and “where” on the part of the insured

I do understand this is not a simple formula – tick the box – write the accurate report this way - type of answer – and I trust you will see why it’s impossible to have a one report fits all approach. However I find that starting with a thorough knowledge of the lifecycle and process of a claim it’s easier to provide my own answers when I know what it is that needs to be answered.

And one final point: When (and I do believe it’s when and not if) Coaching and many of the alternative therapies, disciplines and practices become regulated (or at least formally recognized as self regulating) one of the requirements will be that each practitioner has a WRITTEN compliant procedure. There is not one profession governed by an institute or recognised body that will permit its members to trade without such a policy in place, and that goes hand in glove with the requirement to have insurance. So there is no harm in getting into this now – then everyone will be prepared for it when it comes.

Utmost Good Faith (uberrima fides)
All contracts of insurance are subject to utmost good faith in that people are obliged to disclose any detail which may be of importance to the insurers whether or not it is requested.

Whilst the words may seem simple and straightforward there is much written on this important element of insurance contract. In short it means you must disclose anything that MIGHT be considered as material. Take special note of the last few words of the last paragraph. - WHETHER OR NOT IT IS REQUESTED.

Therefore it's no argument to use "Well you didn't ask me THAT question?

Utmost good faith is therefore about Non disclosure.

To consider non-disclosure further it may be helpful to consider what the financial ombudsman has to say about it.
Click here to read it -> http://www.financial-ombudsman.org.uk/publications/ombudsman-news/46/46_non_disclosure_insurance.htm

The insurance industry also has something useful to add - read it here -> https://vault2.secured-url.com/iib/encyclopeadia_item.asp?encyclopedia_id=190

I have recently qualified as a therapist but I am not sure what my earnings will be for next year.If I earn more than I estimate for your quotation where do I stand regarding insurance cover?

Before I provide the answer let me set out how the premium is affected by your income.

There is a distinct difference in the premium when the “average” income is above £100,000 (€150,000) pa compared to a business where the income is below that average.

The reason for asking the income is to determine the size of the business – a larger premium for bigger businesses (where the risks are inevitably greater) and a more modest premium for smaller businesses.

If you have a new business then we can only expect an estimate. Now you are aware of the effect average income has on premium we would only expect you to contact us if your income were substantially higher than the figure you provide to the extent that it put it in excess of £100,000 but below £250,000.

We cannot cover a business (under standard terms) if the business income is an average greater than £250,000 pa.

To illustrate with some example figures.....

Your question:
“I estimate my first year income to be £30,000 – but halfway through the year it clearly is likely to be around £60,000 – Do I need to tell you?”

Our answer:
I think you will see from the explanation I provide the answer is No.

Your question:
“I estimate my first year income to be £80,000 – but halfway through the year it clearly is likely to be around £120,000 – Do I need to tell you?”

Quite what would happen if the actual income figures were similar to the example above I do not know, but I guess additional premium might be appropriate dependant upon when in the year we were informed and the actual numbers involved. All I can say is that this scenario has never caused a problem for us before.

What is the difference between a "Claims made" and a "Claims arising" policy?

To explain the difference it is easiest to first understand the unique circumstances that surround Professional Indemnity insurance. Please go and read the answers to What are the key dates?

To illustrate by example; With motor insurance when there is a claim there is no great time gap between the "accident" that gives rise to the claim and when the claim is made. A claim is made immediately following an "accident".

Professional Indemnity can be quite different. The claim can arise years after the incident that causes the claim.

A "Claims made" policy is one in which the insurer will consider a claim they are informed of and the claim is first known about during the policy year. The incident that caused the claim could have been years ago - but a key date is the date on which the claim is first known and advised.

A "Claims arising" policy is one which the insurer will consider a claim (at any time in the future) if the incident that gave rise to the claim occurred in the policy year.

Most policies today are "Claims made" for the very simple reason that the insurer can "close his books" after the policy year. An insurer issuing a "Claims arising" policy can never close his books.

The easiest way to answer this is by reference to two other questions answered here.

To clarify matters – you are covered for… “any negligent act error or omission ….” It means what is says – ANY.

Breach of copyright is a … “negligent act” as may be many other things too numerous to list.

The words in the policy were selected to provide the absolute widest cover for … “any negligent act error or omission …” and we really do not know of a better collection or words to cover anything.

If it’s a “product” you are concerned about then that would be covered under the clause dealing with products …..”arising out of any goods or products designed, manufactured, constructed, altered, repaired, serviced, treated, sold, supplied or distributed by the Insured.”

So, in short the answer is Yes on all counts regarding the professional indemnity AND the public liability side of things and to do with products.

On the application form you ask for my income. Please explain why you want it - and what exactly you mean?

The reason the underwriters need this is to establish the size of the business. Profit, for instance, is absolutely no good as an indicator of size as it can vary so much. The most reliable indicator we know of is your gross turnover - or total business income. So that is why the underwriters require it - to get a feel for the size of your business.

The figure to provide is the correct figure to the nearest 1,000 (or a reasonable estimate) of gross business income derived from the business activities you are seeking cover for.

Therefore, to illustrate with an extreme example. If your business has a gross business income, before VAT, of say £1,000,000 but only £90,000 related to the activity you were seeking cover with us for, then £90,000 would be the figure to enter.

How come there seems to be no paper for me to sign to
get the policy issued? - this doesn't seem to be the case anywhere else.

That is true and we are the first to introduce no signature policy issue in commercial insurance - see below for further explanation.

Do you have to sign anything to make this insurance valid?

The short answer is No.

If you look at the wording carefully you will see that your signed declaration that the information entered is correct is required at or before a claim NOT that this is required in order to issue your policy.

We pride ourselves on being the first to introduce commercial insurance that does not require a signature in order to have a policy issued.

This makes the process very convenient because the only time you would be called on the confirm that your information is correct is in the even of a claim, and, if there were a claim there would be a flow of paperwork anyway and a declaration would be just one of the papers exchanged.

Can I cancel this policy?

The short answer is No.

This type of insurance cannot be cancelled.

The underwriters have to maintain the cover because a claim could arise at any time up to the expiry date of the policy, and if it did then they would be duty bound to deal with it. That is what this form of insurance is all about.

If you ceased business that does not mean a claim could not arise between the date you cease business and the end of the policy year.

The policy contains medical terms - I don't do anything medical - Why are they there and what does it mean?

Background:
Our policy was originally crafted and constructed to cover Coaches and what Coaches do. We soon discovered that some Coaches are engaged in other therapies and disciplines. Some of these other disciplines have "medical" elements, and we wished to provide cover for them also. As a very simple example - Aromatherapy - does have a medical element to it. It might not be much but it is there. The policy was therefore modified to include some medical terms to make it suitable for some therapies and disciplines.

So that's the background as to why there are "medical malpractice" terms within the policy.

What does it mean to you if these terms do not apply to you.
Quite simply, if they do not apply to you - they do not apply to you - so just ignore them. They have no effect on your policy.

Policy documents are written to cover many eventualities. If you read through the entire document you will find probably several clauses that do not apply to you. However they might apply to someone, so they therefore have to be there.

Because there are terms and conditions in a policy that do not apply to you does not in any way diminish the cover the policy affords.

What's important is what the Policy wording says you are covered for: This is what our policy covers you for: "any negligent act error or omission committed by the Insured or by any employee of the Insured ....."

What's the difference between Errors and Omissions (E&O) insurance, Medical Malpractice Cover and Professional Indemnity insurance

In short the answer is not a lot in the practical world. They are expressions that effectively means the same thing but tend to be used in different types of business. The insurance they provide covers essentially the same thing - the consequences of a claim that you did something wrong or didn't do what you should have done.

E&O
Tends to be used in business. Where a claim might be as a result of something the business did or didn't do. Clearly there's no medical component and no advice in the "professional" sense.

Medical Malpractice
Tends to be used wherever there is a medical element, Doctors, nurses, dentists etc.

Professional Indemnity
Tends to be used in the "professions". Now this is where language can tie you up, because - should a Medial Consultant be covered for Medical Malpractice or Professional Indemnity.

It's perhaps easier to answer the question by asking should an Architect call his cover - Medical Malpractice - (clearly no) Errors and Omissions (well maybe - but E&O doesn't include "advice") Clearly professional Indemnity would be the answer.

This is an easy one to get tied up with the words of the title. What's really important is what the cover provides.

In all of the cases used to illustrate this here the answer is - the cover provides for a claim against you for getting some part of your business wrong. Be it an error, omission, incorrect procedure - the claim that you "plain and simple" made a mistake.

A receipt is available from the client only area. To access this you need your ID and password. If you have your ID (there is a new one for each year - and is used to identify the data for one year only) you may request your password from the front page of the site.

If you have mislaid it, let us know your policy number and we will mail the ID and password to the email address we hold for you.

Go to the front page of this website. Enter your ID and password into the Client Log In box. Then select receipt from the Client only area.

The is no Value Added Tax (VAT) on insurance premiums. There is a tax payable called Insurance Premium Tax (IPT). We include this in all our premium quotes. IPT cannot be claimed back - as is the case in some instances with VAT.

I am informed by other insurance companies that if I want to do group work, for example 'pamper parties' I would need to pay extra. Is this the case with your insurance or is it included?

It all depends on what you “do” at a “Pamper party”. If, at a “Pamper party” what you do is practice one of (or a group of) the disciplines, therapies or business practices we provide cover for, then you would be covered for those disciplines, therapies or business practices that we cover you for - and there would be at no extra charge. You will see that we are the only firm offering this form of insurance that actually publishes a definition of each practice we cover. None of these are any more than a very simple description, but you should read them carefully and be sure what you actually do at your "Pamper party" is what we cover you for.

A am currently covered for: Life Coaching, EFT, NLP. I sometimes work with people who have been diagnosed with cancer but I obviously do not give any 'medical treatment'. I assume that section 22 does not relate to the type of work I do but I thought I would double-check with you. Also please confirm that your policy covers me regardless of the health of my client.

I quote a part of the policy clause you refer to: "Claim arising out of any treatment allegedly causing, aggravation or otherwise in connection with cancer".

The policy provides protection for you against a claim made against you that arises either under the Professional Indemnity (that is you made a professional error or omission while dealing with a client) or Public Liability (a claim made against by "virtually anyone" for damages whilst you were about the business you are covered for). The clause you mention deals with "treatment" so you just need to be sure you do not provide "treatment". It is my understanding that Coaching, NLP and EFT explicitly do NOT provide treatment.

Therefore providing what you do is not, cannot be construed as, and in fact plainly is not treatment, then this clause should cause the underwriters little concern when they come to consider a claim made against you.

In the course of your business you could easily deal with people who do have cancer. Some you may know about, other may keep that information to themselves.

For some cancer sufferers there is no detectable change in health to the casual observer, in others it can dramatically worsen their health and it is plain to see.

Given that I am presenting to you here a fully reasoned response I think you (and we) would need to think very carefully on what you mean by "regardless of the health status of my clients". At the most extreme end of the health spectrum I can conceive that if a client were very very ill, you may need to consider if you should actually be dealing with them anyway! Granted I am considering VERY extreme ill health - and thus I would be very uncomfortable providing a complete blanket statement about ANY client in ANY state of health.

Given that very seriously ill people naturally will clutch at straws - and if you were dealing with them - then you should protect yourself by explicit agreement with your client that the service you provide is strictly limited to Coaching, NLP or EFT (as we define it) and that treatment or healing play no part in your relationship.

Having said all of that, and providing that it is plain that no treatment is provided, no treatment expected and none implied, and taking into account the comments about ill health and the degree of ill health your client suffers from, then, in general, I would consider you to be fully covered under the policy.

I am going to stop practicing for a short while - perhaps a year - so I do not need the insurance during that time. Someone told me that is not correct - what is the position?

Professional Indemnity insurance differs from most other forms of insurance because of the strong possibility that when a claim is made it may not relate to a recent incident. Indeed the incident to which a claim relates may have been some time in the past. Please see the section that deals with the difference between "claims made" and "claims arising". Therefore the fact that you are not practicing does not mean a claim cannot arise.

This policy is "claims made" and the underwriters must consider a claim they are notified of during the policy period. Because the policy has a Nil Retroactice date, that means the claim the insurers will consider may relate to an incident that occurred at any time in the past.

With car insurance, for instance, if you get rid of the car - you get rid of the insurance. If you do not have a car right now, then what claim can arise 2 years after you get rid of the car (that you didn't actually know about when you got rid of the car)?

This is very different. The fact that you are not practicing right now, does not mean a claim cannot arise. Another reason why insurers cannot cancel such policies without serious reason - because policy concellation does NOT mean a claim cannot arise.

So, to fully answer the question, it really isn't correct that you do not "need" the insurance beacuse you are not practicing.