Being a financial advisor will make you face the risk while working. The mistake that you do, whether or not it is severe can bring bad results and big losses. To protect yourself, professional indemnity insurance for financial advisors is required.
This insurance is pretty unique. The insurers themselves will provide legal advice for their clients, so they can minimize the amount of money to recover the damage. The rates for this insurance globally are highly competitive. Check the coverage, when you need it, and the company list here.
Reasons Why You Need Professional Indemnity Insurance for Financial Advisors
1. Your work is high risk
Working in this field is very high risk. Error advice will bring a huge loss to the client you have consulted with. The clients may end up asking you for indemnity. This is the work that you need to protect yourself, so you won’t suffer to pay them back in the aftermath.
2. Error is inevitable
Errors can be caused by you and also your employee. If you work carefully enough, your employee still has a chance to carry the mistake. As advisors, you have to be responsible. Since it’s inevitable, purchasing this insurance will help you to recover.
3. Risk management
Purchasing the insurance is part of risk management. Working as financial advisors should prevent this case happens in the future. With excellent insurance for their work risk, it is helpful to avoid bigger losses to pay back the money to the clients.
Factors to Look for from Financial Advisors by The Insurance Company
1. Risk profile
The insurers usually look at the risk profile of the financial advisors. As the client, you can provide your historical data to them, so they can see the risk pattern of your work. The higher the risk, the more expensive the premiums.
2. Competency
The competency of the advisor’s company management is important to look at. If the competency is low, the profile is getting higher and the premiums may be higher too. Meanwhile, high competency can lower the premium insurance.
3. Limit of Indemnity
The coverage limit of professional indemnity insurance for financial advisors will be different for each company. The high-risk profile may get rejected if the limit that the insurance company offer is lower.
4. Experience
The level of experience is crucial. The measurement is not only for the advisors but also for the staff who work under them. More experienced and higher quality may lower the premiums.
5. Claims history
With higher claim history, the advisors may have tailored plans. It means that mistakes and errors often occur during the process. The insurance company will measure how high the claim history is from the data they provide.
How to Choose Professional Indemnity Insurance for Financial Advisors
1. Check the exclusions
The list of exclusions in professional indemnity insurance for financial advisors is important to know. The policy should be read carefully and you need proper consultation with the agent.
2. Check the coverage
A wider range of coverage will be practical for you as a financial professional. Before purchasing the premium, check the list of coverage that the insurer will cover in case you face a mistake.
3. Review the insurance company
Some insurance companies are the one-for-all company. Since indemnity insurance has a specialization, check how the company manage the claims from other financial advisors so far.
4. The price
The price of the premium is the biggest consideration for all financial advisors. A higher price usually means higher coverage. You should choose a company that will insure based on the risk profile you have.
5. Support
It is the best company you can engage with if they provide some other support. The support can be advice from the insurers and solutions for the problem that advisors face when they created errors.
The List of Professional Indemnity Insurance for Financial Advisors Companies
1. Howden Insurance
Howden is a big group and it is famous in the insurance sector. Financial advisors usually purchase their insurance here all over the world. One-third of their members as financial advisors. They are well-experienced for more than 25 years.
This company doesn’t only provide insurance but also advice and solutions for their clients. Howden is the most popular in the UK with more than 20,000 claims in the last 4 years. They have the good financial stability to reimburse their clients’ claims fast and efficiently.
The benefit for financial advisors that they can get from this company is the service is direct. Howden doesn’t engage with other brokers, so the claim is faster. They provide their clients the insightful data to help them avoid the failure of the same case in the future.
2. APEX Insurance
APEX is a reliable company for its professional indemnity insurance for financial advisors. FA business in Europe especially the UK is very big and the loss they suffer is huge as well. APEX promises to give unbiased advice to its clients through their insurance.
Most clients who purchase APEX Insurance are independent financial advisors. Their insurance includes legal defense for them in case they have poor advice. The coverage from this company is data loss, slandering, and document error.
The quote from APEX Insurance is competitive and the rates are reasonable. The policies include the top service and the financial advisors can enjoy a personalized experience with APEX. The renewal and claim process from this company is efficient and fast.
3. Everest Insurance
Everest Insurance has a good history with its clients. This insurance company is one of the best to provide financial advisor professional indemnity insurance. They have many options for those who work in different industries as well.
As financial advisors, it is normal to own the mistake and yet you can claim insurance in case you create incorrect financial advice or privacy breaches. Inappropriate planning. And employee fraud. These errors can be reimbursed by Everest Insurance.
The service from this company is more than standard. They can customize the policies for different clients because some clients are independent and others are under an accounting firm. The price you paid includes the advice and partnership to manage your business.
Professional indemnity insurance for financial advisors is crucial for those who work for this job, whether independent or otherwise. Mistake while working is unpredictable, so protection through insurance will help you in case the clients ask for indemnity.