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Insurance Basiscs

Insurance Basiscs

One of the mistakes people make is thinking that if they do not charge for the service they provide or are only running a small business that they do not need insurance. They may also have the "It won't happen to me" mentality. It is important to understand that if you provide a product or service of any kind, be it for payment or free, you are liable to a claim against you and should have a policy in place.

Put simply, the insurance is a contract you have with an insurance company that exists to protect you in the event that there is a claim against you related to the services you provide. Generally, the insurance policy lasts for 12 months and in legal jargon, this is referred to as the 'policy term'.

There are five key dates relating to your policy and coverage:

1. Policy Start Date - the date you choose your coverage to start, which is not necessarily the same date you purchase the insurance.
2. Policy End Date - the date when your coverage finishes which will be one year from the start date
3. Occurrence Date - the date on which the incident happened, that later gives rise to a claim
4. Claim Date - the date you first know of a claim which should also be when the insurers are informed
5. Retroactive Date - the date after which the date of occurrence must be in order for it to be considered. (We offer a 'nil' retroactive date which means any time in the past).

The premium of the policy is based on key factors such as your annual income level, number of people you wish to insure, the tier of your practice and whether or not you provide services in the US and/or Canada. Providing your services worldwide (excluding the USA & Canada) is already included at no extra cost.

Usually, there are two types of policies: 'Claims-made' or 'Claims Arising'.

A 'Claims Made' Policy means the insurers will consider a claim that they are advised of (and you must tell them at once!) during the 'policy term'. The incident that caused the claim (the 'Occurrence Date') could be in the recent past - and it could have been years before, provided the incident occurred AFTER the retroactive date and you were not aware of the possibility of the claim at the time you purchased your insurance.

A 'Claim Arising' policy covers claims resulting from an incident that occurs during the policy term. In other words, the 'Occurrence Date' and the 'Claims Date' must be within the 'Policy Term'

Another aspect you should consider when buying insurance is the cover level. The cover level is the maximum amount that your insurer will payout in the event of a valid claim. The amount of cover you need depends on many different factors including the extent of contact you have with the public, the service you offer, the types of clients you work with and the size of your business.

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