Businesses are always looking for ways to cut costs no matter which sector they may inhabit. In the current economic climate, it’s more important than ever to make efficiency savings and reduce costs, but cutting back on professional liability insurance can lead to dire straits for a business if the unforeseen occurs.
Many experts have warned firms that while professional indemnity insurance cover is not compulsory in the same way as employers liability insurance cover can be, it can be disastrous to cut back. This is especially true for many construction firms, most particularly for those whose typical projects have significantly shrunken in scope due to the rocky economy.
Some firms may make the questionable choice of doing away with professional indemnity insurance completely. Others may try to cut costs by taking out a policy in which the maximum cover limit is lower than their current cover or by switching to a policy with an aggregate cover basis instead of one that provides a specific amount of cover for each individual claim.
The cover on a typical professional indemnity insurance policy – which is renewed annually – is on the basis of claims made. This means that the policy will only cover a claim that is made within the year the policy covers and makes it especially important not to skimp on such cover, even in times when the economic outlook can be bleak.