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How Your Business Growth May Affect your Professional Indemnity Insurance

by constructaquote - 16 July 2016


As businesses change and grow their setup and structure can change too. You may be involved in a partnership that breaks down, be considering bringing another partner on board or even on the verge of accepting a contract bigger than ever before. You may also be considering a merger of your business with another and in all these circumstances and more you must consider the professional indemnity insurance ramifications.

If you are considering a merger, a change in your firm’s status, accepting a very large contract or any other large change to your business then it is important to think about your insurance cover.

As soon as your business is involved in a merger or acquisition, which can be a hugely positive process, it is important to carry out a full insurance review.

You need to check whether the seller’s existing insurance will cover its main risks, whether the seller already has any potential liabilities which are not insured and also whether they have any existing contracts which guarantee professional indemnity insurance is in place and whether your cover will insure these contracts.

Significant changes in your business may increase your pi insurance premium and this may even occur in-year rather than waiting until the renewal time. You may also find that professional indemnity insurance is more difficult to obtain but this is quite a rare occurrence and usually, if you are involving a new business with your own there will be a way of working with the insurers you are currently set up with. In very rare cases you may also find that your insurer will not provide a return premium if you merge mid-term but this is most likely if you have recently made a claim.

Mergers and Acquisitions Professional Indemnity Insurance

There are specialist Mergers and Acquisitions Professional Indemnity Insurance policies out there and they are designed to provide specific protection to claims made against you during the process of merging with or acquiring the new business. There are specific risks during this process and whilst you may have full understanding of the process, there is always a chance that one of these risks will turn into a problem and you will find yourself subject to a claim.

Whilst growing your business is an exciting time it isn’t without risk. Considering risks isn’t always the first thing on your agenda in a period of growth but if things do go wrong you will be pleased you have the right protection in place.