What is Professional Indemnity (PI) Insurance?

If your line of work is centred around providing a service or giving professional advice then it is more than likely that you will benefit from having professional indemnity cover in place. As a funeral director, your day to day responsibilities include a variety of duties. Given the nature of your work and the care you need to take, it is possible that something can go wrong at any given time.

This is where professional indemnity insurance becomes beneficial for both you and your business. Professional indemnity insurance, also referred to as PI insurance, exists to protect you and your business against claims from customers alleging that you have provided them with inadequate advice and/or service. Cover extends to the legal costs and expenses in defending such a claim, as well as compensation payable to the customer as reparation for the mistake.

Our long association with the NAFD allows us to offer attractive discounts and benefits to its members. Professional indemnity cover is included as one of the prestigious benefits offered to NAFD members. This critical cover provides protection of up to £5 million any one claim and is automatically included as part of your membership of the NAFD subject to the policy terms and conditions.

Suzy Middleton, Deputy CEO at SEIB Insurance Brokers, highlights an important component of this invaluable NAFD membership benefit:

“With, Indemnity Insurance it’s common to see an aggregate limit alongside (or even instead of) a limit for any one claim. The any one claim limit provides cover up to the full limit for each individual claim made, whereas an aggregate limit provides cover up to the full limit for all claims made during the period of insurance.

For NAFD members cover has been arranged on an any one claim limit basis only, and an aggregate limit does not apply.  This means that insurers will pay a maximum of £5 million for each claim in a policy year, with no limit to the number of claims members can make, or the overall pay out. Choosing this approach provides NAFD members with more protection, as there’s no danger of cover ‘running out’ the same way it could if an aggregate limit applied.”

Mistakes can happen in any line of work but it is extremely important to have a safety net for when these mistakes occur. As a funeral director, your role will include the following:

  • Transport of the deceased, planning, preparing and running the funeral service
  • Planning last respects for friends and families
  • Cremation or burial of the body
  • Paperwork and formalities

Genuine mistakes can happen whilst carrying out your responsibilities, and PI insurance will help to eradicate the financial burden and damages that can come along with this. Here are some examples where professional indemnity can cover legal costs and damages:

  • Defamation: someone claims you've said or written something that's negatively impacted their reputation
  • Losing documents, items or data: This can include physical paperwork going missing or the personal items/jewellery of the deceased
  • Negligence: for example, incorrect identification of the deceased or wrong collection and release of cremated remains
  • Employee dishonesty: when people you employ are underhanded or commit fraud without your knowledge, an example of this is when your employees are given the responsibility to handle donations and irregularities are later recorded
  • Transmission of computer viruses: if you accidentally spread a virus by email or by sharing data that damages other people's networks

Operating without professional indemnity insurance leaves your business open to claims from third parties. Usually, they will be your clients, but other third parties could also potentially make a claim.

Will my PI premiums go up this year?

Last year the insurance industry was unfortunately tested by the unforeseeable pandemic crisis. COVID-19 had a knock-on effect on how financial providers operate and offer their services. This negative effect accelerated what is known as a ‘hard market’. A hard market can be referred to as an upswing in the insurance market cycle when premiums increase. Rates had for some years been at an all-time low, but the effects of low interest rates, increased capital requirements on insurers, increased cost of reinsurance premiums, Ogden Rate changes and the impact of storm claims just before the pandemic hit, are just a few of the reasons for a hardening market to occur. The culmination of these factors is being described as a perfect storm affecting the insurance industry and driving up rates.

Fortunately for NAFD members, the effects of the hardening market will not be reflected in your premiums this year as this forms part of your overall membership package; professional indemnity cover is automatically provided to all Category A members. Purchasing this valuable cover through your Association means you are sheltered from the hardening market and are not seeing the impact you would experience if you arrange your policy separately.

How can SEIB help?

Although the current market may reflect a rise in premiums at the moment, we will always try our best to maintain the best rates when it comes to other business policies you might place with us. Crucially, with the advent of what could be the hardest market for a generation, we can point to strong relationships with a number of leading UK insurers. As insurance capacity is tight, the respect we enjoy with these insurers can help us to shield our clients from the worst effects of the hardening market.

SEIB are on your side, so our priority is based around providing you with the best assistance and advice available. Our experienced team will be able to offer you a competitive insurance package designed to meet the unique needs of your business.

About SEIB

SEIB’s experience with the funeral directing industry goes back over 40 years, and we have recently been described by a client as a “funeral director’s best friend”. The funeral directing community has made a huge effort to meet the challenge of the pandemic. We want you to know that our team are here to help, and to find out about safeguarding your business premises and vehicles, or protecting your business from the cost of a cyber-attack, please contact us by calling 0345 450 0648 or writing to info@seib.co.uk