Business Insurance Guide for the Self-Employed – Part 2

Navigating the world of business insurance can be confusing which is why we’ve made it our mission to make it a bit easierWe’ve created a guide to business insurance for the self-employed that profiles the main types of cover to consider and how it can protect you for the long run. 

In Part 2 of our guide, we explore the ins and outs of Professional Indemnity insurance. 

What is Professional Indemnity insurance*?

Professional Indemnity insurance is an important form of protection for businesses that provide specialist services or professional advice.  Some of these types of professions include accountants, architects, consultants or migration agents. 

It 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 will also assist with the legal costs associated with responding to or managing claims which are covered by the policy.  

Even for some of the most experienced professionals, mistakes can still happen. Some of the triggers for a Professional Indemnity claim include: 

  • Providing the wrong advice 
  • Incorrect diagnosis or treatment  
  • A miscalculation  

What is typically included?

Depending on the Professional Indemnity policy selected, your policy could include cover for: 

  • 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 is typically excluded?

Depending on the policy you have selected some of the exclusions could include: 

  • Intentional damage   
  • Contractual liabilities   
  • Your professional fees   
  • Known claims and circumstances  
  • Fraud and dishonesty  

Why do self-employed workers need it?

As a professional, you take pride in delivering your advice and services but mistakes can still happen. Even by experts. Professional Indemnity insurance gives you peace of mind and protection when you need it most. Even your mistake was unintentional, a claim can have a significant impact on your business. 


Unless you have a money tree growing in the garden, the financial disruption of a claim could be enough to send you out of business. Without the protection of Professional Indemnity insurance, personal assets like your home may be at risk to cover the claim-related costs. 


Something often overlooked is the amount of time involved with the claims process. Legal proceedings can drag on for  months and even years. This can take you away from your business and the potential to earn an income. Professional Indemnity insurance helps bear the on-going legal costs involved with the claim and allows you to have a legal professional manage the process for you whilst you can better focus on your business and operate as normally as reasonably possible during the process. 


Nothing can replace the years of training, experience and networking that create a professional reputation. All it takes is for a claim, whether it’s actual or alleged, for it all to come crashing down. Professional Indemnity insurance provides the support to defend a claim while protecting your hard-earned reputation.  

Some Professional Indemnity insurance policies may even include coverage for PR related expenses, something that should be confirmed by your insurance provider.  

Claim example

The Insured was an architect hired to provide advice and calculations related to the construction of a building structure that was located in close proximity to HV and transmission powerlines. 

The designs allegedly did not comply with Australian standards of building setbacks for transmission lines, which resulted in the construction works being stopped midway and demolished. The client claimed for significant re-design and rectification works and a settlement sum of $250,000 was paid (and covered by the architect’s PI policy). 

What is run-off cover?

Run-off cover is an extension to an existing policy which comes into effect when you stop trading. It is meant to cover claims relating to professional work carried out before the policy was placed into Run-Off. For many industries, Run-Off cover is a mandatory requirement. 

For a Claims Made policy like professional indemnity, the Run-off cover extends the period a claim can be notified in.

Recommended reading: Claims based vs Occurrence based insurance

Run Off provides cover  when your business ceases to operate, for any acts, errors or omissions that may have occurred prior to ceasing the business. Remember that when a claim arises a current policy must be in force. 

Need more information?

For more information on business insurance give us a call or jump online. At BizCover we’re all about making insurance easy and hassle-free, providing multiple quotes from some of Australia’s leading insurers in minutes.

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

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