Has anybody experience of claiming on indemnity insurance (looking to get insured)

[mudskipper]

My most recent qdos IR35 review said its important to have it from an IR35 perspective.

Was the review from a company which sell it?

My contract says I should have it, but agent has never asked to see it.

For a couple of hundred quid it doesn't do any harm I guess.

[tractor]

..

It seems to me that the OP is only equating cheap=better. This is not always the case as with any insurance.

Things to look out for:

How much of the benefit is from a shared pot? Many PI insurances have a sum and a sum from a shared pot which is split across all of the policyholders. I always check how much this is and also, how much of that pot is currently at risk i.e. how many cases are already going on that may use the money from that pot. Insurers don't like answering that question but they are required to if you ask it as it would be a material factor in your choice. You would be surprised at how much is at risk at any one time.

This is important because if 100% of the shared pot is already at risk, there wouldn't be any left for you if you needed to claim!

[adam42]

It seems to me that the OP is only equating cheap=better. This is not always the case as with any insurance.

Things to look out for:

How much of the benefit is from a shared pot? Many PI insurances have a sum and a sum from a shared pot which is split across all of the policyholders. I always check how much this is and also, how much of that pot is currently at risk i.e. how many cases are already going on that may use the money from that pot. Insurers don't like answering that question but they are required to if you ask it as it would be a material factor in your choice. You would be surprised at how much is at risk at any one time.

This is important because if 100% of the shared pot is already at risk, there wouldn't be any left for you if you needed to claim!

Admittedly I know very little about the insurance business but I thought that the insurer is only limited in their liability towards me by the sum I choose for the maximum pay-out, e.g. £1 million. What you are saying sounds to me as though insurance companies are allowed to insure people without the risk of going bust if there are too many claims for them to handle, i.e. they can do bad business and not pay the price - or have I miss interpreted what you said?

I'm quite willing to phone them up and pose awkward questions to them, but there must be a more technical insurance term for "pot"? I'm not sure I'll get the right response if I phone up and demand to know how big their pot is.

[tractor]

...

Admittedly I know very little about the insurance business but I thought that the insurer is only limited in their liability towards me by the sum I choose for the maximum pay-out, e.g. £1 million. What you are saying sounds to me as though insurance companies are allowed to insure people without the risk of going bust if there are too many claims for them to handle, i.e. they can do bad business and not pay the price - or have I miss interpreted what you said?

I'm quite willing to phone them up and pose awkward questions to them, but there must be a more technical insurance term for "pot"? I'm not sure I'll get the right response if I phone up and demand to know how big their pot is.

Check whether it or any element of it is a 'block policy' the total amount for the block is also known as the 'pot' and there may be further conditions e.g. 'single claim' or 'single claim and in all'. The latter means that there is only say £1m split across the liability for many insured risks. If a large amount is already 'at risk' i.e. the subject of claims then the potential pot is much lower.

All this is beyond most agents, all they care about is that you have a certificate. But if you need to claim, it may become an issue. Hopefully, none of us will ever need it

[adam42]

Check whether it or any element of it is a 'block policy' the total amount for the block is also known as the 'pot' and there may be further conditions e.g. 'single claim' or 'single claim and in all'. The latter means that there is only say £1m split across the liability for many insured risks. If a large amount is already 'at risk' i.e. the subject of claims then the potential pot is much lower.

All this is beyond most agents, all they care about is that you have a certificate. But if you need to claim, it may become an issue. Hopefully, none of us will ever need it

If I understand you correctly, what you are saying is that the insurance company offering the PI insurance might covering itself using a "block policy" from its underwriter / re-insurer. In the event of lots of the insurer's customers claiming, the total claims on the block policy might reach the underwriter's max limit at which point they pay no more.

That however surely is between the insurer and its underwriter? Surely the insurer would still be obliged to pay out on my claim due to contractual obligation, regardless of whether they covered their arse? I just checked the specimen contract from QDOS and it makes no mention of block policies or any other limitation to the amount of possible claims except the £1 million ceiling.

In fact I think this puts it quite clearly in the terms and definitions in the specimen contract, pretty much ruling out that eventuality anyway:

Indemnity limit
Shall mean the Insurer’s total liability to pay damages, claimant’s costs, fees and expenses, and shall not exceed the sum(s) stated in the Schedule in respect of any one claim or series of claims arising out of one originating cause regardless of the number of persons claiming an indemnity from the Insurer under the terms of this Policy

I'm surprised an insurer could get away with that. It sounds like the Not the Nine O'Clock News sketch where the bank customer asks for his savings and the Mel Smith shows him the empty shoe box.

[tractor]

...

If I understand you correctly, what you are saying is that the insurance company offering the PI insurance might covering itself using a "block policy" from its underwriter / re-insurer. In the event of lots of the insurer's customers claiming, the total claims on the block policy might reach the underwriter's max limit at which point they pay no more.

That however surely is between the insurer and its underwriter? Surely the insurer would still be obliged to pay out on my claim due to contractual obligation, regardless of whether they covered their arse? I just checked the specimen contract from QDOS and it makes no mention of block policies or any other limitation to the amount of possible claims except the £1 million ceiling.

In fact I think this puts it quite clearly in the terms and definitions in the specimen contract, pretty much ruling out that eventuality anyway:

Indemnity limit
Shall mean the Insurer’s total liability to pay damages, claimant’s costs, fees and expenses, and shall not exceed the sum(s) stated in the Schedule in respect of any one claim or series of claims arising out of one originating cause regardless of the number of persons claiming an indemnity from the Insurer under the terms of this Policy

I'm surprised an insurer could get away with that. It sounds like the Not the Nine O'Clock News sketch where the bank customer asks for his savings and the Mel Smith shows him the empty shoe box.

The policy you looked at may well not have a block element. Go check the PCG/Caunce O'Hara policy it has a 1m limit and is shared, this has all been asked before http://forums.contractoruk.com/busin...dvise-req.html

Whether you think it is ok or not (I don't either), it is reality and something that you should consider - If it is to much of a risk or is unacceptable to your agent, choose a policy that has no shared liability. This is why I raised the issue, so you can make an informed choice

[GazCol]

FYI – at least to my knowledge, there hasn’t been an issue with block policies since Independent Insurance (from memory) went bump in the 90s, since then the FSA/FCA tightened up capital rules so that insurers have to have enough capital to cover all claims for policy holders up to their insured liability value.