The last thing a company wants is a call out of the blue informing them that a claim has been made against them for work they completed five years ago. A retrospective warranty can be useful in the situation.
What does insurance that covers the past do?
By doing this, you can be confident that the insurance policy you choose will cover all of the previous projects your company has taken on.
All professional indemnity insurance plans are drafted on a premise known as “claims made.” This means that if you have a claim or are informed of a claim, the claim will be handled by the professional indemnity insurer that covers you at the time the claim is made, not the insurer that covered you when you performed the work that is being claimed against.
For instance, if you worked on a project three years ago and someone today informs you that they have discovered a mistake in your work that has cost them money, the claim would be handled by the insurance you are currently covered by.
This is why it’s crucial to check that your PI insurance policy includes adequate retroactive coverage.
Some insurers only provide coverage for you as of the date you sign up with them, thus if the aforementioned scenario occurred and a mistake was discovered in your prior work, the insurer would deny the claim because they do not provide retroactive coverage for you.
In the first place, you’re getting insurance to protect both your business and yourself.
Paying for insurance that does not properly protect you, your company, and any prior risk or exposure is meaningless.
It is essential that you take the time to find a policy that offers complete coverage, gives you protection, and gives you peace of mind, so you can continue expanding your business knowing that any future claims will be adequately handled.
When considering your insurance requirements, keep the following three considerations in mind:
Thoughts To Consider
Consider canceling your insurance. Or how about a change? Always keep in mind that Professional Indemnity insurance are created based on actual claims.
The insurer with whom you have an active policy will handle any claims that are made against you or that are allegedly made against you.
Therefore, before canceling your policy or switching providers, be sure that retroactive coverage is covered and that you are aware of any potential costs associated with include coverage for prior services. You and your company will avoid any more difficulty as a result.
Safeguard The Past
Retroactive coverage will give you security for the future by protecting you for any work or contracts you may have entered into in the past.
One of the most crucial criteria to consider when buying professional indemnity insurance is this. You wouldn’t want to receive a call in three years saying that your inaccurate structural calculations put you at fault for a building’s collapse.
You might believe that you don’t need your insurance until your next work if you’ve just finished a contract.
Some independent contractors call to cancel their professional indemnity insurance after signing their most recent contract because they don’t have any additional business lined up.
It’s critical to consider your past exposure at this point and decide whether the danger of going without insurance is worthwhile.
If you have any questions regarding your current insurance coverage, please feel free to reach out to us with any questions.
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