If you offer professional services to customers, you need to buy indemnity insurance, which covers your professional liability˳ There are different decisions which you have to make as a buyer˳ One of them is what insurance amount to purchase˳ Find out how to determine the optimal amount which you will need for getting effective financial protection˳
What is your company’s revenue and net worth?
The size of your revenue and the value of your company’s assets are the two major determinants of the amount of indemnity insurance that you need to buy˳ This is because customers who have incurred property damage or suffered bodily injury will require larger compensation from wealthier businesses˳ It is a good idea if you determine the cover amount as a percentage of your revenue˳ That way, if your revenue increases, you will know that it is time to buy more cover˳ Even if you own a small business, you have to avoid getting underinsured˳
What is the value of your service and how is it used?
The cover amount should correspond to the value of your service˳ This is because in case of a claim the customer will take into account how much they have paid to determine the size of compensation which they require˳ For instance, a financial advisor who charges three-figure hourly fees will require much more coverage compared to a mobile pet groomer working in a small local neighbourhood˳
The nature of the service determines the level of risk which the professional assumes when providing this service˳ The higher this risk is the larger the indemnity insurance amount should be˳ For example, medical doctors who perform surgeries require a larger cover amount compared to general practitioners˳ This is because the risk associated with surgeries is much higher compared to the risk associated with medication treatment˳
What kinds of clients do you have?
The wealth of your clients is another factor which you need to take into account when deciding on the optimal cover amount for you˳ Wealthier people and companies are able to hire top lawyers who are more likely to win a larger compensation in the court of law˳ If you offer services which are considered to be luxury or if you provide financial services to big investors, you should definitely buy more coverage˳
You should also take into account any increase in the risk due to the individual characteristics of your customers˳ For instance, professionals who work with young children should consider getting more coverage just to be on the safe side˳
Take your time to determine the optimal indemnity insurance amount which you will require˳
Source by https://ezinearticles˳com/?How-Much-Indemnity-Insurance-Do-You-Need?&id=8522258
