Professional liability insurance covers damage caused to third parties by a company in the course of its business. It is not compulsory for all professions, but is strongly recommended for all contractors, whatever their activity. You can cancel your professional liability insurance by mail.
What is professional liability insurance?
Professional liability insurance, also known as "RC Pro", protects the contractor in the event of material, immaterial and/or bodily damage caused to a third party in the course of his business.
The amount of damages to be repaired is then fully or partially covered by the contractor's professional liability insurance. This covers damage caused to third parties, property and equipment entrusted to the contractor, as well as damage caused by or to an employee of the company.
It can be supplemented by other guarantees:
- Cyber liability: this covers damage caused or suffered in the event of a cyber attack;
- Third-party vehicle liability: included in business automobile insurance, this covers damage caused by the use of a business vehicle;
- Operating liability covers damage arising in the course of the company's day-to-day business, outside the scope of its services.
Professional liability is a very small expense compared to the amount of compensation payable in the event of damage caused to a third party, which can be so high as to bankrupt the company.
Is professional liability insurance compulsory?
Professional liability insurance is mandatory for regulated professions. These include
- Legal and consulting professionals: lawyers, bailiffs, notaries, chartered accountants, real estate agents and architects;
- Health professionals: nurses, physiotherapists, dentists, doctors, midwives, etc. ;
- Transport professionals: cab drivers, VTC drivers, lorry drivers, etc. ;
- Building professionals ;
- Travel agencies ;
- Insurance companies.
This list is not exhaustive, as France has a large number of regulated professions.
Contractors whose business activities are not regulated are not required by law to take out professional liability insurance.
However, it is still highly recommended, whatever the activity, as damage caused to a third party can jeopardize the very survival of the company, as compensation payments can quickly become very high. What's more, a number of customers are likely to inquire about the existence of professional liability insurance, and refuse to work with a company that has not taken out such a policy.
How much does it cost?
The cost of professional liability insurance depends on a number of factors, including :
- Coverage included in the insurance contract: various types of coverage, such as cyber liability or operational liability, can be added to the insurance contract, which can vary the monthly cost;
- Number of employees: the larger the workforce, the greater the risks to be covered, and the higher the price;
- Company sales: professional liability insurance increases in proportion to sales;
- The level of cover chosen: the lower the deductibles, the higher the compensation ceiling and the fewer the exclusions in the contract, the higher the monthly cost of the insurance;
- The nature of the business: the higher the risk, the more expensive the insurance, because the risk of compensation is higher.
When should you cancel your professional liability insurance?
Cancellation of a professional liability insurance policy can occur in a number of different situations.
Firstly, the company may cease trading, which is a legitimate reason for termination even if the contract has not yet expired. The company has 3 months from the date of cessation to send a cancellation letter to its insurer, by registered mail with acknowledgement of receipt, accompanied by the documents justifying the cessation of activity. Cancellation will be effective 30 days after receipt of the letter.
Other situations justify cancellation of the contract after the expiry date, such as the retirement or change of activity of the entrepreneur, his relocation or the liquidation of the company. In these cases, as in the case of cessation of business, the cancellation letter must be sent to the insurance company within 3 months of the event occurring.
The company may also decide to cancel its professional liability insurance in the event of a contract amendment. Unilateral changes to the policy are generally stipulated in the general terms and conditions, and often lead to an increase in the insurance premium.
The company then has the right to terminate its contract. It has 30 days from the date of the change to send the termination letter to its insurer, always by registered mail with acknowledgement of receipt. Cancellation is effective upon receipt of the letter.
Lastly, you can cancel your policy when it expires. The contract is valid for one year and is renewable by tacit agreement. If a company does not wish to have its professional liability policy renewed, it must send its cancellation letter no later than two months before the expiry date. However, this deadline may be shorter or longer, so it's important to check the insurance contract to make sure you're not caught short.
How do I write a letter to cancel my professional liability insurance?
The termination letter must contain a number of elements, including :
- Insured and insurer contact details;
- The date on which the letter is written ;
- The word "cancellation" in the subject line;
- Contract subscription date ;
- Contract number and benefits covered ;
- Reason for termination ;
- Contract expiry date.
If the cancellation request is made after the expiry date, the letter must be accompanied by the necessary supporting documents. Legally, there is no obligation to send the cancellation letter by registered mail with acknowledgement of receipt, but it is a highly recommended precaution to prove that the letter has been received.