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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