When you’re in the business of giving advice or providing a specialist service, you may need insurance to protect against mistakes, negligence, and other types of professional wrongdoing. In Australia, having coverage may even be a legal requirement.
Let’s look at who must have Professional Indemnity insurance in Australia and some reasons why small business owners consider it even when it is not required.
What is Professional Indemnity* insurance?
Before we answer the question, “Is Professional Indemnity compulsory?”, let’s review what this type of coverage does.
Professional Indemnity (PI) insurance protects businesses that provide professional advice or specialist services. It is designed to respond to claims against your business for losses resulting from actual or alleged negligent acts or omissions in delivering your professional service or advice. PI Insurance will also assist with legal costs associated with responding to or managing claims covered by the policy.
Is Professional Indemnity compulsory in Australia?
For many businesses, Professional Indemnity insurance is not mandatory. However, some occupations are required to have minimum amounts of PI coverage. This requirement may be set by state or federal legislation, a professional regulator, or an industry body.
Occupations that must have Professional Indemnity insurance include:
- Architects and Draftsmen
- Bookkeepers, BAS and Tax Agents
- Electricians in QLD
- Finance and Mortgage brokers
- Plumbers in VIC
- Real Estate Agents in NSW
- Registered Migration Agents
Information on minimum coverage for each occupation can be found on government websites or through your professional organisation.
Should I have Professional Indemnity cover even if it’s not required?
Many small businesses have Professional Indemnity cover, even when it is not a legal requirement.
For some, having coverage helps them meet client expectations. While it may not be mandatory in some industries, your clients might still expect you to have PI coverage. It’s not uncommon for maintaining minimum amounts of coverage to be part of a business contract. Coverage may also be necessary to receive government contracts.
Others simply enjoy the peace of mind that these policies can bring. A PI claim can be expensive, potentially leading to hundreds or thousands of dollars in legal fees, compensation, and public relations costs. A PI policy could cover these expenses for you, so you don’t have to.
Showing proof of your Professional Indemnity cover
You may need to show proof of your PI policy to receive or renew a professional license, bid on government contracts, or sign a contract with a client.
To do this, you will need to provide a Professional Indemnity certificate of currency. This is a document that confirms your policy is current (“in force”) as of the date the certificate was issued, the level of cover you have, and other details about the policy.
Certificates of currency are often downloaded from your insurance provider’s website. Your insurer should also provide an updated copy whenever your policy is amended.
Find Professional Indemnity insurance with BizCover
If you are looking for Professional Indemnity insurance for any reason, BizCover can help! We make it easy to compare and buy PI coverage in minutes, online or over the phone. Start protecting your small business today—no dramas!
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