What benefits does professional liability insurance offer?
When you are an independent professional, you deal with many clients. Therefore, the risks in the event of damage are manifold. It is important to take out professional liability insurance that is tailored to your situation. What Are the Real Benefits of Professional Liability Insurance? What factors can affect the cost of professional indemnity?
When should you take out professional liability insurance?
It is important that all professionals take out insurance to protect themselves. Professional indemnity insurance (RC Pro) is the most recommended insurance for all trades. This cover protects you from harm that you may inflict on others as part of your company. It protects you financially if your liability is challenged by a supplier, partner, subcontractor or customer.
Professional indemnity is mandatory for certain self-employed people, such as e.g.:
- health professionals (nurses, doctors),
- Legal professionals (bailiffs, notaries, lawyers),
- real estate agent,
- construction professionals,
- Financial Investment Advisor.
Even if you do not engage in any of the regulated activities listed, it is important to have a liability insurance professional. As a self-employed person, this insurance must be indispensable for you, because you are directly liable in the event of damage. In addition, in the event of damage, the amount of damage can be too high and disadvantageous. It is therefore necessary to take the necessary precautions to protect your business and therefore your assets.
In addition, you can take out insurance directly to find out more damage covered and want to get a quote or simply find out about RC Pro insurance, you can consult a specialized platform. There are websites that cover the topic in detail. They provide details of the contexts in which civil liability makes sense.
For example, if an IT developer makes a code error that causes a customer’s website to become unavailable, the RC Pro can cover the damage. In such a situation, the damage can be up to 4,000 euros, depending on the number of days. A considerable sum if you have to dig into your own pocket.
What affects the price of an RC Pro?
Several factors can affect the cost of an RC Pro. Your job is the first factor. A freelancer who works from home and not in a business park runs less of a risk. The price of his insurance will be lower. The size of your company can also affect the cost of the RC Pro. A self-employed person working alone is exposed to fewer risks than a company with several employees.
We can also mention your sales. It’s an essential factor. The risks are greater when the volume of activity is high. The legal form of your body can also affect the price of your RC Pro. For example, an LLC generally costs more than a micro company. Over and beyond, your industry can play a big part in the cost of your RC Pro. Some sectors are more risky than others, such as medicine and construction.
In addition to these main factors, there are other elements that can affect the cost of professional indemnity insurance. We can quote, among other things:
- the basic guarantees,
- optional guarantees,
- Disclaimer of Warranties,
- the degree of coverage,
To these elements are added Compensation Caps. The higher they are, the higher the cost of the RC Pro. Finally, your insurance can also affect the price of coverage. In fact, there are no regulated tariffs for professional insurance. Each insurer is free to propose its price. The tariffs then vary from insurer to insurer. The same applies to brokerage fees. Each broker is free to offer its own courses.
Warranty limits, deductibles and exclusions: what to consider?
There are certain factors to consider when purchasing professional liability insurance. Find out what to look for in these basic elements of an RC Pro.
Guarantee limits for professional insurance
The contract for each type of insurance provides compensation limits for the guarantees. Liability is no exception. Analyze well Compensation Caps avoid unpleasant surprises. These are the maximum amounts victims can receive in compensation.
Warranty Limits are set by each insurer. They can be communicated by insurance year, by claim or, in certain cases, by a mixture of both. For example, your contract may include compensation limits of EUR 200,000 per insurance year and EUR 50,000 per claim. Insurers take into account the insured risks to determine the level of the caps.
Deductibles for civil liability
Liability insurance contracts usually include a franchise. This is a balance to be paid by the insured in the event of a claim. In most cases, civil liability does not cover all damages caused to a third party. In the event of damage, you bear part of the costs. There are different ways to present your franchise. It may bea predetermined fee and cannot vary. If the amount of damage (in the case of minor damage) does not exceed the flat rate, your insurer will not intervene.
You can also opt for this a percentage retention. It can be a percentage of the amount paid by your insurer or the total compensation. Finally, you can opt for a mix of the two options mentioned. In this case, your insurer sets a fixed limit that is combined with a percentage of the total cost of the compensation.
Exclusions from a professional insurance contract
When drafting the clauses of a professional liability insurance contract, the insurer is exempt from certain damages. that’s what we call it Exclusions of a Civil Contract of Liability. An insurer rejects any willful damage caused by an insured. The same applies to damage known before the subscription. Any damage that occurred before the first insurance period came into effect is excluded.
In addition, penalties, fines and fees that a company may be subject to are excluded from the contract. Some insurers may also exempt directors from criminal and civil liability. It is necessary for this be accompanied by a broker to fully understand the terms of your insurance contract.