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View Full Version : Professional Indemnity Insurance - necessary or not?



TommyFlockton
5th October 2003, 14:27
The agency that's got me my latest contract 'strongly recommends' that I get Professional Indemnity Insurance (it wasn't an issue with agency or employer at my last contract). I've checked out the price of such and its several hundred quid for £1million of cover.

How many contractors here have such insurance, and do you believe it is a must have, and if so how much cover is enough i.e. 100k, or 500k, or more? If it's relevant, I'll be doing some UI testing and producing the online help for a financial app.

jacko
6th October 2003, 09:18
If you think that you're a professional and you want people to treat you like a professional, then act like a professional. Get it. Some projects (and agencies) expect you to have PII on joining.

Others in your field will tell you how much you need.

zeitghost
6th October 2003, 11:41
I've never met anyone who had it.

A lot of contractors didn't even have employer's liability...

Caunce appear to have a reasonable scheme based on your annual turnover but IANAL.

I investigated PI through a non specialist broker & was quoted about £1000+.

I also looked at the I.E.E. scheme which seems to be oriented towards people who design power stations & is even more expensive.

freshblue
6th October 2003, 12:59
Many of the brolly/composites provide it inclusively

itallhelps
6th October 2003, 20:40
but say you needed to call on the PI insurance - what are the exclusions? if you were sued wouldn't you be caught by the t&c's which said words to the effect "if you are a 'bad boy' this policy is null & void" a bit like car insurance/drink driving.

TommyFlockton
6th October 2003, 21:49
It was on the ParasolIT site where I got the quote for circa £320 for £1milion of cover.

From the replies I've seen here it definitely seems to be an optional extra.
So I suppose the real question is, has anybody heard of any contractor being put in a position where he has to claim on PII?

zeitghost
7th October 2003, 08:44
Contractors no, but remember that unfortunate surveyor who worked for an estate agent.

He surveyed a house, missed some cracks in the walls (as you do).

Six years later, the estate agent business had folded, so the client came after him & despite the fact that he was employed by the estate agent & not directly by the client, he got stung for £40k.

Concentrates the mind a bit.

WWW ITDoctors co uk
7th October 2003, 09:47
I don't have Professional Indemnity Insurance.

The clients and agents on all my contracts to date have not specified it as a requirement. Clearly clients and agents have their own insurance cover and they are confident that they will never need to recover substantial sums of money from me or my company.

PII was also supposed to be a factor in deciding IR35 status but from the court cases so far it does not seem to have any real influence over the outcome and why should it? I think a number of companies have made some money out of selling it though and at least one has disappeared leaving contractors without their insurance.

What business worth it's salt pays several hundred pounds on an insurance that clearly is not required in most cases?

Obviously I would take out the insurance if it were a mandatory requirement for a new contract but luckily in my case that hasn't happened so far.

Regards

The Accountant

rooney
7th October 2003, 11:46
An accountant with no PI! Now that is an eye opener. Isn't it compulsory to have this in the accounting profession regardless of what individual contracts from agencies state?.

WWW ITDoctors co uk
7th October 2003, 13:12
Apologies - I didn't explaim myself properly

I am an IT contractor - 'The Accountant' is a pseudonym.

Mark Snowdon
7th October 2003, 13:16
Maybe you should make that clearer rhino ?

it is rather misleading....

antagoneyes
7th October 2003, 13:22
Many of the brolly/composites provide it inclusively

Yes and of course those darling umbrella companies do it all for free and without a hint of self-protection.

Simes
7th October 2003, 13:24
If you think that you're a professional and you want people to treat you like a professional, then act like a professional. Get it. Some projects (and agencies) expect you to have PII on joining.

Or you could act like a business man and only spend money where it's necessary, thereby looking after the bottom line.

I don't have it, have never heard of anyone else with it, and have never heard of an instance whereby someone has belatedly needed it.

freshblue
7th October 2003, 13:35
www.contractoruk.com/cgi-...-%25B-%25Y (http://www.contractoruk.com/cgi-bin/item.cgi?id=9445&d=193&h=220&f=223&dateformat=%25o-%25B-%25Y)

antagoneyes
7th October 2003, 13:46
I think that's what's known as a 'blatant add' Freshblue.

Moderator - please remove the post?

zeitghost
7th October 2003, 13:49
How can it be a blatant ad, it goes to a CUK site?

And that leads you to Caunce if you click on a link.

Wow.

antagoneyes
7th October 2003, 13:52
Sorry to offend shiteghost - just my idea of a joke.

Caunce do of course pay CUK a referral fee - would we have it any other way?

fiddleabout
7th October 2003, 13:55
My current contract specifies that my company must indemnify the agent for claims against employees of my company. It does not specify the company must take out PI insurance.

In the absence of that insurance the claim would fall against my company assets - a battlescarred desk, 3 clapped ot PCs and a handful of other junk plus some capital - total value probably < £500. Nobody has ever asked to see copies of any insurance certificates.

Some years back I had a contract through Spring which in the small print said the company must have PI insurance. Once again nobody asked to see a certificate.

I've never taken out PI insurance and have no intention of doing so unless forced. I rely on the protection offered by my Ltd. and in not being Milan.

zeitghost
7th October 2003, 14:10
Antagoneyes, do you think they'll pay me a fee since I mentioned them first?

antagoneyes
7th October 2003, 14:27
Antagoneyes, do you think they'll pay me a fee since I mentioned them first?

Unfortunately not - CUK don't tolerate the independant salesman.

If it were between us you would get the commission - not because you mentioned them first but because I don't believe in the product. Freshblue obviously doesn't count:-)

fiddleabout
7th October 2003, 14:30
> Freshblue obviously doesn't count

From his past posts on a couple of topics I'd go further than that - he not only doesn't count but apparently cannot count.

rooney
7th October 2003, 22:23
"I've never taken out PI insurance and have no intention of doing so unless forced."

and that is the crux of the matter. Unless we are forced we won't do it. As soon as the agencies start demanding PI certificates then we can either get it or go to another agency/job...if there is one!

antagoneyes
8th October 2003, 00:13
and that is the crux of the matter. Unless we are forced we won't do it. As soon as the agencies start demanding PI certificates then we can either get it or go to another agency/job...if there is one!

...and your point is??

Better spell it out for me rooney

rooney
8th October 2003, 11:43
My point is: that the market will drive whether we have to have (and prove we have) PI. The market is driven by the clients through the agencies to us. The clients are now demanding the agencies they have adequate PI and the agencies will try and pass this on to us. The agencies now ask for VAT registration and company registration details as a matter of course. I believe PI will become compulsory and everyone will have to prove they have got it. The smaller agencies may let it pass but the market is always driven by the larger players. I know for a fact Hays are mandating PI and as a result they have got together a list of "accountancy providers" that their contractors must use.

Heinzbenes
8th October 2003, 13:07
Hays cannot dictate which accountant I use.

rooney
8th October 2003, 15:29
No they can't but they can dictate that your limited company (which may be your own 1 man band, composite or umbrella) has PI else they will not allow that company to service that contract. So if you have your own ltd company you would be forced to get the PI, use another provider (composite etc..) who would be on their preferred supplier list (i.e. they have the PI which meets the contract reqs) or go and get another contract.

antagoneyes
8th October 2003, 16:15
PII is not mandatory for most contractors as their agents and clients do not insist on it.

If several agents were advertising the same contract and Hays was one of them, guess which one I would avoid?

rooney
8th October 2003, 17:30
There is an ever increasing trend in contracts to include mandated PI. If the client enforces it then the agencies enforce it. In my last 3 contracts in IT I needed £1M PI cover, no cover at all and then unlimited cover! The £1M contract needed a certificate to prove it (so I had to take the cover out) whilst the others didn't require it.

The choice is yours but in a bad market there are often no other choices. Let's hope the market picks up quickly.


Admin note: professional indemnity insurance (http://www.contractoruk.com/insurance/professional_indemnity.html) and public liability insurance (http://www.contractoruk.com/insurance/business_liability.html) available here :-)

freshblue
8th October 2003, 19:10
Fiddle lends his great intellect to the debate again.

It's a CUK article about PI and they (CUK) then go on to mention their offering! Can CUK please moderate CUK and remove an intersting news article... I think somewhere down the line CUK has to make a living? If you don't like the news go somewhere else. Fool

antagoneyes
9th October 2003, 08:08
It's a CUK article about PI and they (CUK) then go on to mention their offering! Can CUK please moderate CUK and
remove an intersting news article... I think somewhere down the line CUK has to make a living? If you don't like the
news go somewhere else. Fool

I think you'll find it was me freshblue and as usual you totally missed the point!

I guess you may contribute something useful to this forum at some stage but assume concentration at school is the main priority at the moment?

zeitghost
9th October 2003, 08:51
Hey, rooney, how much does unlimited cover cost then?

rooney
9th October 2003, 09:54
I think you know the answer on that one.

fiddleabout
9th October 2003, 10:02
> I guess you may contribute something useful to this forum

in the case of freshblue who can't even figure out who posted what I think your guess will prove wrong.

In about 10 years time when his mummy has kicked him out and he has to fend for himself it is just possible that he might wise up a bit but I personally doubt it.

freshblue
9th October 2003, 11:16
Perhaps if you lot spent more time working and less time moaning then you might actually contribute something positive? The jury is clearly out as to whether PI will ever become mandatory or highly desireable by the agencies. Will also depend on industry sector e.g. imagine trying to get PI in the rail industry if you woked on signalling software.

fiddleabout
9th October 2003, 11:19
Can we get back to some useful comment here please? © Bradley 2003

Vetran
10th October 2003, 11:54
I have it, renewed despite being less than fully employed.

Unfortunately the limited company doesn't give you protection against professional indemnity.
I notice in the surveyors case no longer being employed by said estate agent didn't give him protection either.

EL & PL are mandatory, you can buy an all in one insurance that includes PI from £165 so it seems silly not to, if you don't have these insurances AIUI you can't be trading legally.

If you sign a contract saying you have PI and don't then I wouldn't be surprised if they go after your house, you don't actually have to be in the wrong, just the costs of fighting the case could be massive.

zeitghost
10th October 2003, 13:32
Good point Vetran.

Being terminally paranoid, I've had EL & PL since day one.

PI is a curious insurance.

Most insurance works on the principle that whoever was insuring you at the time the problem occurs carries the can (up to six years in the past).

PI (so I am informed) ain't like that.

It's whoever is insuring you *now* that carries the can, even if someone else was doing it when the problem happened in the past.

Most odd.

BlasterBates
14th October 2003, 10:40
This reminds me. I survived without insurance because in the last project, there was little damage I could inflict, but I think in our new anti-contractor litigous society its now an unavoidable must. When all these costs are taken off it really is hardly worth contracting these days.