We were recently asked to carry out an annual review for a new client’s Professional Indemnity Insurance. As is standard practice, we began to review our client’s needs and requirements in order to establish the best solution for them and at a premium they were happy to pay.

We quickly learnt that they would require a policy to cover them overseas including the North America and Asia where many of their clientele are based. In addition, it was also unveiled that their client contracts were subject to local legal jurisdiction and not UK Law - a red flag for Professional Indemnity Insurance, given the wider exposure of potential defence and compensation costs.

In light of this we asked our client what their expectations were in terms of premium and were surprised at how low their target was. Naturally, we asked who their existing insurer was and where they obtained such cover. Immediately they dropped the bombshell that their current policy was purchased the year before by themselves, online, directly from a high street insurer. Last year they set up as a new venture and these terms just seemed too good to be true, so we asked them if we could review the existing policy before engaging in our market review. It quickly became apparent from checking the terms and conditions of their policy that cover only applied to UK legal jurisdiction which only accounted for 26% of the clients turnover! They were grossly under insured on the wrong basis.

Needless to say we highlighted this error and arranged a new policy with wider coverage to meet their needs. It’s quick and easy to buy insurance cover online but at what cost? We regularly assist clients who have come to us where they have previously bought Insurance online on the wrong basis – mainly due misunderstanding the policy terms, limits provided and coverage offered with worrying exposures to risk. Using a local broker can save you time, money and they can provide invaluable advice and guidance on areas you may never have even considered. Don’t spend money for old rope, be smart and seek advice from your local broker.