Key Factors that Impact Professional Indemnity Insurance Cost

Pi insurance premium amounts vary from insurer to insurer. Each insurer or insurance company takes a view depending on the risks the business is subject to. Accordingly, premium rates are decided.

Profession and Industry Type

One of the biggest factors affecting the cost is the type of business or industry. For example, a clinical establishment is typically subject to higher risks due to the nature of medical services and patient care, making it crucial for insurers to assess the likelihood and severity of claims. The insurance company evaluates industry standards and activities performed to determine the premium.

Size of the Business

While a growing business is a sign of how well things are flourishing, it may also need more coverage of professional indemnity insurance. A small retail business with a single outlet may have lower risks compared to those with a higher number of outlets. Thus, the premium amount will also increase.

Annual Turnover

Similar to the above point, the amount of professional fees bears a direct relation to professional indemnity insurance costs. For instance, if the professional charges a higher fee, the premium cost will be higher.

Geographical Areas

Jurisdiction of operation too plays a vital role in determining the cost.

Experience of the Professional

The professional’s ability to provide accurate advice, manage client’s expectations, recognize and mitigate client disappointment etc., determines the premium amount.

Claims Experience

The frequency and severity of claims are major determinants of professional indemnity insurance costs. Also, if the professional is unable to provide adequate remedial action, it shows a lack of risk management. All these reasons significantly affect professional indemnity premiums. It can also be said that past records help insurers weigh the risks and judge the premium calculation.

Level of cover

Finally, the type of cover you choose decides your premium. Like most things, the more goods you buy, the more you pay for them. Similarly, while choosing a cover, if you choose a comprehensive cover or include add-ons to the basic cover, the premium to be paid will be more.

Conclusion

While applying for professional indemnity insurance, ensure the actual practice is reflected. The insurance company is responsible for conducting due diligence. But, you as an applicant should aim to provide key details that help you get maximum coverage at the good rates. This practice will help the insurer develop an accurate picture of the necessary coverage for your business.