Professional civil liability insurance provides essential guarantees to the company because it allows it to be covered against the risks related to the exercise of professional activity. This insurance is not compulsory for all companies, it depends on the nature of the activity. In practice, however, it is strongly recommended to avoid putting the company at risk if the damage is caused to a third party (whether related to the company or not).
What are the damages covered by professional liability insurance?
The professional civil liability guarantee makes it possible to cover the costs of defense as well as the damages resulting from the questioning of the company in the execution of its activity. It covers damage caused to third parties, whether they are related (suppliers, customers, employees, etc.) or not (a passerby) to the company. Regarding the origin of the damage, the causes are multiple: negligence, error, action, imprudence, fault…
Defense costs include in particular the fees of experts and lawyers engaged in the context of the proceedings. The insured damage may take the form of:
- property damage, when the property is damaged or destroyed,
- immaterial damage in the event of financial loss,
- bodily harm in the event of injury or death.
Particular attention should be paid to the list of exclusions generally included in the insurance contract. Each item on this list will not be covered by the insurer. For example, if fines and penalties are excluded, the company must pay them themselves (while their amount can be high).
Is professional liability insurance compulsory?
Professional liability insurance is not compulsory for all companies, it depends on the nature of their activity. Several regulated professions are required to take out professional liability insurance. Here is a list of several activities affected by the obligation to take out professional indemnity insurance:
- accountants, lawyers, notaries, bailiffs,
- health professionals (general practitioners, dentists, osteopaths, physiotherapists, etc.)
- travel agencies,
- general insurance agents,
- companies transporting people or goods.
What is the limit of the amount of the professional RC guarantee?
The professional civil liability guarantee covers the company up to a certain limit. This is included in the contract, which generally provides for a limit of cover per year of insurance and per claim. Thus, the insurer undertakes to compensate the insured up to the agreed maximum ceiling. Beyond the ceiling, it is up to the company to bear the compensation.
For a new company, the choice of the amount of the guarantee is not easy to fix. Many professionals advise, in this case, to choose a guarantee of a minimum amount of 250,000 euros per year of insurance. Then, everything will depend on the characteristics of your activity and the risks to which you are exposed.
How much does professional liability insurance cost?
The cost of professional indemnity insurance varies according to the characteristics of the company. It mainly depends on:
- the nature of the company’s activity (or its APE code),
- the amount of its turnover,
- of the number of employees.
Then, the budget to be provided will depend mainly on the list of guarantees requested and the special conditions included in the contract. For an activity without major risk, professional RC insurance will involve a budget of a few tens of euros per month.
How to choose your professional RC insurance contract?
To choose a professional liability insurance contract, you have several options:
- solicit one or more insurance agent(s) for advice and request a proposal,
- use an insurance comparator or an online service to obtain quotes.
The professional insurer has the advantage of being able to advise the company on the risks specific to its activity, and on the guarantees, it needs to cover itself. When using a comparator, the objective will generally be to obtain a price. However, some comparators also focus on the quality of guarantees.
Are there additional guarantees for professional liability?
There are many specific and complementary guarantees to professional civil liability, the interest of which depends on the nature of your activity. Professional civil liability covers damage that occurs during the actual performance of the services. However, this is not the only type of risk that may arise.
Here are some other complementary guarantees to professional indemnity insurance:
- operating civil liability, which covers direct or indirect damage caused to third parties in the context of the company’s daily and routine activity;
- operating loss cover, the purpose of which is to compensate for a drop in turnover resulting from an accident (flood, fire, machine breakdown, etc.);
- professional legal protection, which allows you to be represented and defended by your insurance in legal proceedings.
Professional multi-risk is a contract that covers all the needs of the company: premises, equipment, civil liability, operating losses… It is a contract that provides complete protection. for the company.
Finally, if the company uses the property in the exercise of its activity, specific insurance is also necessary, such as business premises insurance and vehicle insurance, for example.
What to remember about professional liability insurance
Here are the main things to remember about professional indemnity insurance:
- This insurance is only compulsory for certain activities. In the absence of an obligation, it is still strongly recommended;
- Professional civil liability only covers you against risks that arise during the performance of the activity. Many risks are not covered by this insurance;
- The causes of the damages covered are multiple: error, imprudence, fault, negligence, etc.;
- It is necessary to be particularly vigilant at the level of the elements excluded from the guarantee;
- It covers damage caused to third parties, whether they are related to the company or not;
- The cover is limited by ceilings (an amount in euros), applicable per year of insurance and per claim;
- To get the best value for money, it is best to contact several insurance companies.