Continuing insurance cover after the contract

[Lance]

They can't and you shouldn't be. However if they decide to sue you for a mistake uncovered after you left - which is entirely possible - YourCo will rapidly run out of money if your policy has lapsed; we don't carry £1m minimum value insurances for fun you know and a commercial lawyer to defend your side start at around £300 an hour.

Ignore the cost, which is trivial, it's simply common sense.

Indeed.

Unless you are closing the company you should keep your insurance going.

[malvolio]

I can’t see how they can enforce you to have something after the contract has ended. It’s way too open ended.

They can't and you shouldn't be. However if they decide to sue you for a mistake uncovered after you left - which is entirely possible - YourCo will rapidly run out of money if your policy has lapsed; we don't carry £1m minimum value insurances for fun you know and a commercial lawyer to defend your side start at around £300 an hour.

Ignore the cost, which is trivial, it's simply common sense.

[Lance]

I can’t see how they can enforce you to have something after the contract has ended. It’s way too open ended.

[Glencky]

Professional indemnity insurance is written on a 'claims made' basis, which means that any event/ error on which a claim is being made MUST be within the period covered by the insurance AND the claim must be reported within the period of insurance. This means that even in very general terms, to protect yourself you must maintain PI insurance for a period beyond the time you're actually working (particularly if, for example, you have significant assets within your limited company which the company could be sued for).

I have not seen a contract myself with this kind of clause, but I'm not particularly surprised it's in there. It does rather depend what you're doing but obviously it's not uncommon for some kinds of error to be identified some way down the track. And from the client perspective, given the nature of 'claims made' cover on PI insurance, if your PI cover expires the day you walk away from the client they've got no cover, and they're back to only being able to get out of your company what is within your company (hence my comment about whether you've got significant assets in the company). So yes, it's worth querying but you may have to stump up if the contract is worth it to you.

My last agency insisted on me having employer's liability insurance even though I could clearly demonstrate to them that as sole employee of my limited company, I didn't need it and wasn't legally obliged to have it. But the discussion was part of a long saga of ridiculousness in the prescreening process and in the end I gave up on trying to win this particular point as this kind of cover is so cheap that it wasn't worth delaying things further over. So in your case, your choice whether to accept it or walk...

[unixman]

Some clarification has been provided. PI insurance after the contract period "would only be required if the contract is extended". Fine I say, and obvious. But completely different from the wording in the contract (above).

Either way I am happy to proceed and will maintain PI cover indefinitely. It's cheap anyway. And after 4 years, if they did come at me legally for something, and my PI had in fact run out, I think having the document covering the time of my "mistake" would suffice.

[saptastic]

No expert but Clients can sue for negligent acts within six years of the work being finished. This is the statute of limitations on PI I believe. So I assume I am not sure whether it needs to state it in the contract or not it is still valid.

[northernladuk]

Speak to whoever issued it. Ask them to explain why this is in. If there is a valid reason and not 'it's always been there' (which I suspect is the case) then negotiate.

As I say I would guess it's historic or something someone has copied and actually isn't correct so a simple phone call could resolve.

[unixman]

Hi Malvolio your tone implies disagreement, but you have agreed with everything I have said so far. Pay attention.

[malvolio]

What matters is when the fault was committed, not when it was discovered. At least I think so.

It might be relevant that the agency in the 6-year insurance situation is also selling insurance...

On your other point: yes, of course I always have PI during a contract. But that is not the same as saying I will have PI coverage applying on every day in the next 6 years.

The fault was committed when the faulty code (or whatever) was laid down. The fact that is isn't discovered until some time later is irrelevant. Look up the case of the guy who set up a data backup process that secured the database content but not the key structures that made recovery possible.

And personally I've had PI for 20-odd years, continuously. It's just another comparatively minor cost of doing business.

[unixman]

Faults may not be uncovered until several years after go live...

What matters is when the fault was committed, not when it was discovered. At least I think so.

It might be relevant that the agency in the 6-year insurance situation is also selling insurance...

On your other point: yes, of course I always have PI during a contract. But that is not the same as saying I will have PI coverage applying on every day in the next 6 years.

[malvolio]

Faults may not be uncovered until several years after go live...

That aside, what kind of a business does not have adequate PI in place anyway?

[northernladuk]

Well my first port of call would be to ask whoever issued to contract to clarify. If it is a typo you've wasted a post on CUK

[unixman]

Howdy

Contracts often include a clause like this, requiring you to have relevant insurance and to continue it after the contract expires:

maintain during and for 12 months after an Assignment
insurance in accordance with the Insurance Requirement for
the purposes of clause...

What about this though, from a more recent assignment:

The Consultancy shall maintain the professional indemnity
insurance policy in force for at least 6 (six) years following completion of the Assignment.

Six years? Seems a bit steep, and expensive. For legal purposes, all that should really matter is that insurance was in place when you made the cock-up. Thoughts?