Nervous Newbie Professional Indemnity Questions

[PTP]

Morning all

I've read dozens of times that one of the benefits of operating through a limited company is that it is a seperate legal entity to the individual. I thought I remember some of these going on to say that this means the contractors personal assets are never under threat.

I'm looking to take out professional indemnity. The cover usually offered by my accountants is't ssuitable because it doesn't cover work in my professional field. So I've been given contact details of 2 brokers who can help secure cover for this professional field.

I've just been on the phone to a broker and they say that if I have a policy November 2011 - November 2012 but don't renew it (most likely because I have gone back to emplopyment), then if in January 2013 a claim was made against me for mistakes I made in July 2012 then I won't be covered. In other words, I need to maintain cover for 6 years after I stop doing work.

My concern/questions are:
*If I made a mistake in July 2012 (obviously not knowingly) and I had closed the company down and gone back to employment prior to any claim being made, would the money in my personal bank accounts be under threat?
*If no, is't it true that there is no point in maintaining professional indemnity for 6 years and even now no point in taking out cover greater than whatever amount the agency demand (£1m) because my company is never likely to have assets over £1m?


Thanks

[prozak]

I think you are right.

Contract is with your Ltd company. that is the extent of your liability.

[craig1]

There are very few ways that a creditor or claimant can get through the veil of incorporation and if one of those ways are involved then most PI insurances would have an exemption meaning they wouldn't cover you anyway! Usually around dishonest conduct and so on...

[ASB]

Check what you are signing contract wise. A lot of contracts will have clauses which attempt to make directors personally liable too. Even if they don't there is a possibility a suitably aggrieved injured party will try it anyway (though often with little realistic prospect of success).

Say the incorporated builder who builds your extensions stuff up badly and it collapses - shortly after he has ceased trading. Would you just say "oh damn, never mind" or would you at least make some attempt at seeking recompense from him personally?

In practical terms the liability is effectively limited by the company assets (should it exist at the time of the claim), but it you do really foul up badly you personally could still get attacked (with little prospect of success for the claimant)

[LottoPlayer]

I dont believe it would be possible to bring a PI claim against the director of a Ltd Company which has been wound up. The extent of a directors liability is mainly around credit agreements, bank debt or debentures, leases, that kind of thing.

I cant really see on what basis you'd have an insurance policy as the company wouldnt exist any more?

I'm not a legal expert though, just done a lot of contracting!

[SueEllen]

I dont believe it would be possible to bring a PI claim against the director of a Ltd Company which has been wound up. The extent of a directors liability is mainly around credit agreements, bank debt or debentures, leases, that kind of thing.

I cant really see on what basis you'd have an insurance policy as the company wouldnt exist any more?

In some professions you have to have run-off insurance if you cease trading/practising, and in theory you could get a contract that demands your company to have such a policy if you go out of business.

Asking for the company to have this is more sensible then the stupid agencies trying to screw directors personally.