Top 6 Considerations for Purchasing PI Insurance
- May 13, 2014
- by Kevin E. Whaley
- Business Tips
Whether your need is driven by a desire to protect yourself from liability suits that can occur as a result of operating within the investigative business, to comply with state licensing regulations, or simply to satisfy a customers contractual requirement, here are some of the top things to consider prior to making the purchase.
Investing a little time and effort now to do the research may prove invaluable prior to finding you don’t have the coverage after you are sued and the claim is denied.
1. Occurance vs. Claims Made Policy Forms
The coverages provided under these policy forms are very different.
- Claims Made Form
This policy provides coverage for the policy term purchased; however the notice of claim MUST be filed within the policy term or within the extended time allowed for reporting which is often 90 to 120 days.
- Occurrence Form
This policy coverage form provides coverage FOREVER for the policy period purchased.
2. Watch Out for Additional Costs
Ask prior to purchase if additional premium taxes, policy issuance fees, or charges for additional insured status, waivers of subrogation or primary/noncontributory wording will be applied in addition to the premium quoted. This can significantly increase your insurance cost.
3. Does the Carrier Carry Endorsements of Credible National/State Trade Associations?
Why reinvent the wheel? Often times trade associations have done the research for you in determining the best value for their members
4. Make Sure You Disclose Everything You Anticipate Doing
The application process with any carrier will ask you to fully disclose details in regard to the services you plan on providing. If you carry a firearm, provide executive protection, do polygraph work or security consulting disclose it or you will risk a claim denial if you have a claim in these areas.
5. How Many Entities Are Involved in the Insurance Placement Process?
Another prudent question may be to ask how many entities are involved in the insurance placement process. A typical scenario may be a local agent contacts a wholesale broker that has access to a managing general agent that ultimately binds coverage with an insurance company. That is four people in the process, which increases the chances of something going wrong, not to mention many hands in the pot, which increases the cost to you, the PI.
6. Choose an Expert
Often times, when it comes to buying business insurance, PI’s rely on who they know, often being their agent/broker with whom they insure their home or auto, or a local business insurance generalist.
Would someone hire a PI that is an expert in forensic accounting fraud to perform executive protection services? Probably not. Even though both are licensed as PI’s, the person would want an expert in that specific field.
The same rationale would apply to choosing an insurance agent for your PI firm. An expert in this unique type of coverage can speed up the process and give you valuable guidance.
There are many other considerations outside of the top 6 discussed here. Request a specimen copy of the policy you are considering and READ IT prior to purchasing. The devil is really in the detail.
After all, you are a trained investigator. Apply your skills to this process.
For more information on insurance for PI's, visit isisinsurance.org.
About the Author
Kevin E. Whaley LIC; Mr. Whaley has spent the 30 years following his collegiate background in insurance and risk management within the insurance field on both the carrier and broker sides of the business, much of which is dedicated to the security and investigative industries. He currently exclusively handles the coverage of the Society of Former FBI Special Agents. ISPLA (Investigative and Security Professionals for Legislative Action), and NALI (National Association of Legal Investigators), amongst many others.