How It Works
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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