There are dangers and risks associated with owning and operating one’s business. No matter the size of your business’ reach – small or corporate, one must be aware that if the business offers any kind of services to its clientele, it is liable against a professional indemnity claim. This claim is essentially put forth against the company when a customer finds that the services they receive are not up to the mark or have led to considerable damage to their own business. Rather than facing such an issue, it is recommended that one invest in professional indemnity insurance. If a legal claim is made against one’s business or their employees, having such a coverage claim can help one with all the legal payments required.
It is generally recommended that one insure all of their expensive belongings, including covering the different aspects of their business. In Australia, having insurance coverage is mandated by law for running and operating a legal business. For even additional investments in your business, such as a car, it is recommended that an owner gets business vehicle insurance to protect themselves and their financial state in case of any unprecedented emergencies. Getting every aspect of one’s business insured is a sure-shot way to retain peace of mind.
However, if one cancels their existing professional indemnity insurance plans, it comes with a certain set of consequences one needs to be prepared for. One can decide that the insurance no longer serves a relevant purpose as far as their business is concerned or if one has decided to pivot their line of work that no longer requires professional indemnity insurance. Some of such consequences are mentioned as follows:
No Longer Protected
As soon as one’s request for cancellation goes through, one and their business are no longer protected by the financial security of claim coverage in case of any legal claims made against the business for professional negligence or errors made by one or their employees in the course of offering the services.
Financial Consequences
There are a number of financial consequences to consider before opting to cancel professional indemnity insurance coverage. Perhaps the most important one is that one will not receive all the payments they have already paid for their insurance policy. Furthermore, if there is any legal claim placed against one’s business, they would have to pay for all the required legal fees out of their own pocket. Any financial help that could have been gained by having professional indemnity insurance will no longer be there. One will lose all of their safety net by cancelling the coverage.
Short Term Gain
By cancelling one’s professional indemnity coverage, they can perhaps save money on instalments. But thinking long term, one opens themselves up to a lot of legal claims and fees retained in the process of a professional negligence claim. One can perhaps save a lot by putting an end to instalments, but being vulnerable is not the way to proceed either. If one’s financial condition does not allow one to engage with regular payments, one could consider opting for a more flexible plan by talking with their insurance broker. Having a more flexible payment would let one’s business retain security while allowing them to be more financially flexible with their payment options.
Implications of the Past
Once one cancels their professional indemnity insurance policy, they are not safe from any negligence claims that existed before or during their insurance was in place either. It is important to know that one’s business can still receive professional negligence claims from past, present and future. Having no insurance coverage in place can and will open oneself up to all the claims beyond the linear scope of time.
Conclusion
Protecting one’s business and varied amounts of investments is only in the hands of the business owner. One must invest in different forms of insurance coverage to protect their business from any unforeseen and unprecedented situations. Even if one has bought a car, it is important to get business vehicle insurance to protect oneself from any and all unknowable damages. Cancelling one’s professional indemnity insurance must be done with extreme care and consideration, as there are a number of consequences one needs to keep in mind before getting rid of the policy coverage.
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