7 Facts about Professional Indemnity insurance

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7 Facts about Professional Indemnity insurance

Providing expert advice and specialised services assisting your clients is all in a day’s work as a professional. Even though you may take all the care and time in the world to deliver a high-standard of expertise, the reality is claims can still occur, even when you least expect it. 

That’s where Professional Indemnity insurance* comes into play. This form of insurance is designed to protect businesses that provide specialist services or professional advice. Let’s delve a little deeper and look at 7 facts about this important form of business insurance. 

What does Professional Indemnity insurance provide cover for? 

Professional Indemnity insurance is designed to respond to claims against your business for losses as a result of actual or alleged negligent acts or omissions in the provision of your professional service or advice. Professional Indemnity insurance can also assist with the legal costs associated with responding to or managing claims which are covered by the policy.  

Professional Indemnity claims can arise from simple things like giving incorrect advice, a miscalculation, incorrect diagnosis or treatment.   

Some of the things your Professional Indemnity insurance policy will typically provide cover for include: 

  • Payment of compensation as a result of a claim, including but not limited to Court awarded damages  
  • An award of legal costs against you   
  • Reasonable legal costs incurred in defending or responding to the claim  
  • Claim investigation costs  
  • Disciplinary proceeding costs 

What does Professional Indemnity insurance not provide cover for?

These are some of the instances when your Professional Indemnity insurance policy will typically not provide cover. 

  • Claims and circumstances known prior to inception of the policy 
  • Contractual disputes 
  • Disputes in relation to your professional fees 
  • Personal injury or property damage (unless caused by a breach of your professional duty) 
  • Intentional damage 
  • Fraud or dishonesty 

Who needs Professional Indemnity insurance?

Professional Indemnity insurance is intended to protect those who deliver professional advice or services. Some of the common examples of these professions include accountants, real estate agents, engineers, IT specialist and many more. 

Even those in more practical and hands-on roles like consultants and event managers need to consider the benefits of Professional Indemnity insurance to protect themselves and their business. 

Whether you are crunching numbers or designing houses, regardless of the industry that you operate within, you have a responsibility to produce professional advice and services in the highest quality.  

Your Professional Indemnity policy is there to provide financial protection if a client were to make a claim against you for negligent acts or an omission in the delivery of your professional advice or services.  

Take a moment to consider the time and money that is involved with a claim. The financial impact could not only destroy your business finances but you may also put your personal finances in jeopardy too. 

How much does Professional Indemnity insurance cost?

There’s no one size, fits all policy when it comes to Professional Indemnity insurance. Every individual is different, with exposures to various risks. Varying types of professions have unique categories of risks, so as a general rule of thumb, the higher the risk, the higher the premium. 

These are some of the factors that impact how the price of your policy is calculated: 

  • Your business revenue   
  • Size of your business  
  • Amount of coverage required  
  • Who is being covered by the policy? Are they qualified to perform the job?   
  • Claims history  

What is run-off insurance?

There are a variety of insurance policies that are written on a ‘claims made’ basis. This means that they will only respond to claims that are made against an insured and alerted to the insurer during the policy period, regardless of when the insured performed the work the subject of the claim. It also means that if the policy has expired, no additional claims can be made under the policy. 

The reality is, there is the potential for claims to be still made against you, even after your business is no longer in operation or has been sold. If someone was to make a claim against you in the future and you had no insurance in place, you would have nothing there to financially protect you. This is where run-off insurance becomes important.A run-off insurance policy can be taken out before the closure or sale of your business. It is intended to provide additional coverage for any future claims which may be made against you, arising from acts, errors or omissions that occurred prior to the start of your run-off policy.  

Not giving advice could cause a claim

There’s always the risk when providing professional advice that the wrong advice may be given to a client causing them to experience a loss. But did you know you could equally be at risk by not giving advice that may be considered reasonably expected by a professional in your field? 

 Make sure you have a clear understanding of what is deemed as reasonable and expected of your professional advice, because the last thing you want is a claim for a breach of your duty of care.  

What could result in a Professional Indemnity claim?

No matter what kind of industry you are providing your professional advice and services in, there is always a risk for things to go askew. Here are some scenarios where a claim may occur. 

  • Failure to provide promised services 
  • Being negligent in rendering professional services 
  • Providing substandard, incomplete, or incorrect work 
  • Making mistakes or oversights 
  • Accidental omissions       

Getting your Professional Indemnity insurance sorted has never been easier

At BizCover we believe that getting your business insurance sorted shouldn’t be a hassle. We provide a range of competitive insurance options including Professional Indemnity, Public Liability insurance, Business Insurance, Cyber Liability, Management Liability insurance and many more. 

Jump online or give us a call to receive quotes from a great range of trusted leading insurers. Once you’ve selected your policy options, we will deliver all your documents straight to your inbox, with no mountains of paperwork to complete.  

Experience insurance made easy today.  

*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.

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