SMEs delay purchasing PI insurance by 6 months on average

According to new research recently released by PolicyBee, freelance consultants and small businesses typically delay taking out professional indemnity insurance by six months on average.

PolicyBee also found that nearly four out of every 10 survey respondents said that they did not secure professional liability insurance cover until three months or more since opening their doors to the public.  An additional 20 per cent waited two years – or even more – before finally purchasing a business liability insurance policy, the survey found.

The research survey indicates that the firms most likely to delay purchasing the proper insurance cover were communications, marketing, engineering, and design companies.  Other professions, such as a contractor accountant, were much more keen to secure the proper cover, with 9 out of 10 purchasing the insurance right away, with the remaining 10 per cent  buying it before six months had elapsed.

PolicyBee managing partner, Valerie Hockley, stated that she found it encouraging that over 50 per cent of those firms surveyed clearly recognised how important proper business liability insurance is by securing cover as soon as possible.  However, Ms Hockley expressed her shock at how many firms delayed so long, sometimes years, before taking out insurance cover, calling it ‘particularly striking’ that 20 per cent of survey respondents had waited more than two years to purchase much-needed professional indemnity insurance, as they had been exposed to serious levels of risk during that long lapse.

The managing partner also said that there is clearly a very marked difference between industry sectors, as those accustomed to more regulation such as consultancy and accountancy much more likely to secure the proper cover right from the very beginning.  She contrasted the behaviour of the more creative business sectors, such as design and marketing, who delay purchasing cover – despite how much higher risk this exposes them to.

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