Moonstone: PI no longer in the sky
In a small town where I worked, an insurance advisor died, leaving his family destitute as he had no life cover. You can imagine how the people went to town on that juicy bit of news – “he tried to convince all of us of the importance of insurance, but did not practice what he preached.”
Professional Indemnity cover is for many a grudge purpose, particularly now that it will be compulsory for all FSPs from next month.
The same friend who pointed out the problems around homeowners cover from banks outlined in the article hereunder recently applied for PI cover via us, and shared the following interesting observation:
I have never really looked at PI cover details other than trying to understand the concept. In looking at the 1st quote received I saw that “Liability for loss of documents” only cost a nominal extra 5% of premium. Maybe I don’t know enough about this cover but suspect that this is where obvious risk exposure will lie for most of those trying to run an honest practice. Few will consider this extra cover, mainly as they are not aware of it, and you would be doing the industry a huge favour by creating awareness thereof.
I spoke to a number of people about this issue. Cobus Gresse, head of legal and compliance services at Moonstone points out that one should look very clearly at what is required: it is not only a minimum of R1 million for sole proprietors, for instance. The term used is appropriate cover, which might mean that if you only take out the minimum, you could be under insured.
Glenrand MIB sent me a copy of an actual contract which contains details of most of what can be covered. While it is essential that one studies the Master Policy which sets out the terms and conditions, the list is quite an eye opener:
o Professional Indemnity
o Legal defence costs
o Fidelity Guarantee
o Defamation (my vriend in Bloemfontein sal verseker hierna moet kyk!)
o Liability – staff dishonesty
o Liability – Loss of documents
o Support staff extension
o Computer crime
o Compliance officer errors and omissions
o One exhaustive reinstatement
Two interesting exclusions shown in this policy document are those relating to a sublimit of R25 000 on loss of documents and a R50 000 sublimit on Claim preparation costs.
There are various deductibles applicable, all of which are very clearly outlined in the quote prepared in response to your needs.
Like with all insurance there is not a one size fits all model. You obviously need to determine what your needs are, and structure your contract accordingly.
We make use of two service providers, one underwritten by Santam, the other by AIG to ensure peace of mind for our clients.
We suggest you shop around, making sure that you will be covered if the pawpaw should strike the fan one day.
For assistance, you can call Deon du Toit at Moonstone on 021 883 8000, or send a mail to [email protected].
