PI Insurance for past contracts
If you have been contracting for several years and have contractor professional indemnity (PI) insurance
for your limited company, you may have noticed that, over time, your premiums have started to creep up. And you may be put off changing your PI insurance
for fear that a new insurer won’t cover past risks.
But don’t worry. Whilst it used to be the case that many new PI insurance providers were reluctant to take on risks from past contracts, and those that did charged high premiums for doing so, things have changed. If you buy a new PI insurance policy, you can ask that it covers past work and, crucially, has no retroactive date.
PI Insurance with No Retroactive Date
You may have noticed the retroactive date on your PI insurance policy documents. This date is vital, because it specifies the date from which your PI insurance cover runs. All contracts after that date will be covered, but your PI insurance won’t cover claims against you for any contracts prior to that date.
But by selecting the ‘cover past work’ option when choosing your new PI insurance online, or specifically asking for past contracts to be covered, you can ensure that you and your limited company are protected against claims for past contracts. There will be an additional PI insurance
premium to pay, but that’s usually a small proportion of the total. And it is well worth spending the extra cash for the additional cover and peace of mind.
Keep Good Business Records in Case of PI Insurance Claims
Claims made by a client against a contractor’s PI insurance for alleged negligence on past contracts do happen, but are unusual. That is because you will find clients typically quality check and sign off your work on an ongoing basis, and certainly before your contract ends. So, if a claim is likely to arise, it will almost certainly do so quickly.
But claims against your PI insurance
on older contracts can happen, so you should maintain detailed business records for each contract you complete. Retain copies of emails, particularly those exchanged at project milestones, confirming that work has been completed according to the client’s specification, schedule and budget.