Several times recently I have been told by a prospective SOLO that their quote for professional indemnity insurance premiums was lower than they expected. Given an attractive quote based on an anticipated turnover, the temptation is to take it and not ask questions about the method of calculation. After all we must be able to trust the insurance world to play fair. Newvertheless it is wise to ask how the premium is computed before you get on the escalator. One way they do it is to apply a rate to the average fee income over the preceding N years. This is great in year 1 as there is no income but then comes year 2 and the premium rises and so on until you have completed N years.
Now for a policy that pays on a claims-made basis -which means if the claim is made during the policy year, you are covered even if it was for work done last year or the year before - this is quite sensible when you think about it. When you first open the doors chances are you won't receive a claim in that first year at all but the risk increases the longer you have been in practice and so does the premium which can be a surprise and an embarrassment if your income is not on such a steep escalator.
Solicitors, of course, must choose from an approved list of providers as required by the SRA but for the unregulated freelance there are alternatives. Professional insurance is available from a wide range of sources. The cover will never be as all-embracing as the gold plated SRA policy terms but may be adequate. In my travels I discovered this interesting page . Comments very welcome. UK and Irish patent attornies have a mutual insurance association PAMIA. They also consider trademark specialists. For them N is 3.