Professional Indemnity Explained

Description for this block. Use this space for describing your block. Any text will do.

Professional Indemnity Explained

Let’s take the mystery out of your PI Policy.

Professional Indemnity Explained

Insurance terms can be confusing for the uninitiated. To help take some confusion out of the murky world of professional indemnity insurance we have compiled a glossary of terms you will regularly hear when discussing your professional indemnity insurance.

Unless otherwise specified in the policy the Limit of Indemnity (see definition) of a policy represents the maximum amount that can be paid in any one policy period.

Some policies, however, include a clause known as an Automatic Reinstatement Clause which allows the Limit of Indemnity to be ‘reinstated’ for new, unrelated claims, should the original sum be depleted by a claim or series of claims that equals the Limit of Indemnity.

professional indemnity insurance
professional indemnity insurance

Depending on the number of reinstatements provided by the policy this clause can provide indemnity for multiple claims during the year where the total of these claims exceeds the policy Limit of Indemnity. However, no one claim payment by the insurer will exceed the policy Limit of Indemnity.


For example, if the Insured purchases a policy with a 1,000,000 limit of indemnity, and the policy contains one automatic reinstatement the policy provides cover for claims aggregating up to $2,000,000 during the period of insurance, subject to any one claim being no greater than $1,000,000.

Note: Some professional indemnity policies only provide this on an optional basis. Please check the quote or policy wording to ascertain whether the policy contains an Automatic reinstatement clause and the number of reinstatements provided.

DISCLAIMER

This glossary is intended to provide an easy to understand explanation of common terms used in the professional indemnity insurance context. This glossary is not intended to and does not provide any form of advice or contain legal definitions. You must always refer to the relevant insurance policy or other contracts when interpreting your rights and obligations under it. The definitions contained in this glossary do not replace any definitions contained in all professional indemnity insurance policies of insurance. In the event of an inconsistency between definitions in this glossary and a definition in a policy of insurance or other legal documents, the definition in the policy or legal document will always prevail.

DiBNi.co.uk does not warrant the accuracy, adequacy or completeness of the information provided in this glossary.