For an SME in the construction sector, professional indemnity insurance is likely to be a significant cost.
SMEs can be vulnerable to claims - they are not exclusive to large businesses, and unlike a large corporate they may not have the same pool of in-house, legal and insurance expertise when faced with unexpected issues.
Most businesses will likely face a claim at some point and it’s crucial to have the right insurance in place.
Unfortunately, many business owners don’t spend the time they should on getting this issue sorted in a cost-effective way.
If your business’s PI insurance is coming up for renewal, what are the factors you should bear in mind when talking to insurers?
Here are our top tips for engaging with insurers at renewal:
- Make sure you engage early, six to eight weeks prior to renewal as a minimum.
- If you are going to seek alternatives, don’t engage with more than two or three brokers. The number of insurers in the market is limited and you risk wasting your time and that of the insurers. The latter might besubconsciously reflected in their pricing of the risk!
- Try to resist seeking alternatives to your insurance provider each and every year. It can pay to build up a track record and relationship with your insurer, particularly in the event that you make a claim.
- Take time with your submission documentation (proposal form) and ask your broker for advice on how to do this.
- Remember, you are advising the insurers not just what you do but how you do it. Focus on your quality control, steps taken to avoid claims etc.
- Now is a good time to consider higher limits if you have not increased your level of cover for some time. Also, if you think that you might need them in the coming year, get a quote now, while there is competitive tension. It might not be formally ‘bindable’ in the future, but will set a good target. Additional, excess PI cover has never been cheaper due to excessive capacity in the market.
- If you’ve had paid claims in the past, accentuate the positive. Focus on the lessons you have learned, and the training or other investment that’s been undertaken to make sure similar claims aren’t made again.
And finally, if something looks too good (cheap) to be true, it probably is!
If a claim does come around it is likely to be complex and time-consuming and you will need support from both your brokers and insurers.
A stand-out cheaper policy will, most likely, mean something is missing; if cost is your priority make sure you read the small print carefully and be prepared to deal with obstacles at a later date.
Andrew Bowyer is an executive director at Willis