The regulator requires a minimum of R1million sum insured, as the maximum the FAIS Ombud can give a determination for is R800
000.However if a client has suffered a material loss in excess of the FAIS Ombud mandate, the client may elect to pursue this himself and not
use the services of the FAIS Ombud. In this event you have both Legal fees and if the court finds in favour of the client, then redress needs to be
taken and the damages is for the FSP’s account. Once the insurance company has admitted liability on behalf of the FSP, then the deductible
/excess will need to be paid prior to the claim been settled. This could affect your solvency ratio for the FSP per the financially sound
requirements; this could lead to the possible closure of the business together with personal assets. Professional Indemnity insurance operates
on a 'claims made' basis; this means that claims need to be made during the period of the policy, not when the alleged incident occurs. In view
of the claims made nature of the insurance, it is important to maintain continuity of cover. Insurers have seen claims being made against
professionals many years after services or advice was given, and when the assured has relied on their insurance to assist.
PI Cover is there to indemnify the FSP, thus ensuring that there is continuity in the business and protecting all related assets in the business
and personally. What this means is that as your practice grows the risk exposer increases, clients could make a claim long after the original
advice was given. The probability of a claim against you in your practice is more likely than not. Certain things that need to be considered when
buying PI Cover, deal with a broker that will continually interact with you, and explain the important issues related to your business. Remember
to disclose everything on any application or renewal, MAKE SURE THAT YOUR CLIENT MANDATE HAS CLEAR INSTRUCTION WHEREBY THE CLIENT
INTRUCTS YOU TO PROCEED.As an application does not constitute an instruction. Ensure your retroactive cover is based from the time you
started practicing, should a complaint arise the underwriter will check when the alleged transgression was done.
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