PI insurance practicalities – renewals, expiry and cancellations
Professional indemnity insurance, or
PI insurance, used to be almost exclusively the preserve of professionals such as
accountants,
lawyers,
architects and
engineers. Typically, PI insurance was seen as expensive, difficult to obtain and process driven, involving mountains of paperwork.
Nowadays, most
contractors,
freelancers,
consultants and
professionals have PI insurance as a matter of course, and many PI insurance
policy providers are among the leading customer service firms in financial services. This means that when it is time for a PI insurance renewal, or when you need to make changes to your PI insurance
policy, most providers are incredibly responsive and the process is relatively hassle-free.
When your PI insurance is expiring or up for renewal?
Allowing your PI insurance to lapse could leave you exposed to the risk of a client claiming you have been negligent and suing for compensation. But fortunately lapsing PI insurance
policies needn’t be an issue: your PI insurance provider will send a reminder around 30 days before your
PI insurance policy is due to expire, so you can ensure there is no gap in your coverage.
If you plan on taking a ‘belt and braces’ approach and want to diarise your PI insurance
policy renewal date, make sure you set it for not more than 30 days before expiration. It is not generally possible to renew more than 30 days before the expiry date.
Cancelling your PI insurance
Should you decide to return to permanent work before your PI insurance policy expires, or if this is your first contract and it is terminated before you start, then it is possible to cancel the policy. If you cancel your policy within the first 14 days of cover, or within 14 days of receiving confirmation that cover is in place, you will receive a refund and your policy will be cancelled.
After the first fortnight has elapsed, PI insurance
refunds are generally provided on a pro rota basis. Your full cancellation rights will be included in your PI insurance
policy documentation. If you intend to continue contracting, it is generally not a good idea to cancel your
PI insurance, as you could be exposing your business to the risk of being sued without any protection in place. That could prove very expensive indeed.