Professional Indemnity Insurance Explained
If you’ve got burning questions about all things Professional Indemnity insurance, then you’ve come to the right place! Our Professional Indemnity guide covers some of the basic questions you may have about like what does Professional Indemnity insurance mean, what does it cover/ exclude and some of the types of events which may result in a Professional Indemnity insurance claim.
Professional Indemnity Insurance defined
Professional Indemnity insurance protects professionals against claims of negligence or breach of duty made by a client as a result of receiving professional advice or services from your business.
If someone alleges that you’ve made a mistake, overlooked a critical piece of information, misstated a fact or they have misinterpreted you in the course of your work, and this results in a financial loss for your client, then they may take legal action against you to recover these losses.
Whether or not the allegation is true, Professional Indemnity Insurance seeks to protect your assets, your reputation, and the contents of your back pocket should this occur. This means you can continue in your business without the stress of financial or reputational ruin should a claim arise.
The risk of claims against you isn’t always determined by your skill or level of professionalism. There is always the risk of an unhappy client making a claim against you. While you can’t control this, we’re here to make sure you have some control in what happens next.
Regardless of the merit of a claim, your Professional Indemnity Insurance will pay for your legal defence as well as any judgments or settlements that you or your business may have to pay to compensate the suing party, up to stated policy limits.
Going to court to defend a claim might be in your ‘too hard basket’ but consider not going could be viewed as an admission of guilt and have worse repercussions on your reputation!
If you have to make your debut in front of the judge, make sure it’s not costing you an arm and a leg!
What could result in a Professional Indemnity claim?
While you may take all the care to ensure you provide your professional services and advice in the most responsible manner, the reality is claims can still happen. That’s where Professional Indemnity insurance can provide peace of mind and the protection your business deserves.
These are some examples of the types of claims which could arise:
- Failure to provide promised services
- Being negligent in rendering its professional services
- Providing shoddy, incomplete, or incorrect work
- Making mistakes or oversights
- Accidental omissions
What is Professional Indemnity Insurance?
*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
Do I really need Professional Indemnity Insurance?
If you’re getting paid for your professional advice or opinion then you need to make sure you are covering yourself! Professional Indemnity cover is important for:
- Anyone who provides professional advice or services to a business or individual
- Contractors looking to work for the government and many organisations are required to have cover to be awarded a contract
Professional Indemnity insurance provides a financial safeguard to help protect your business in the event that a claim is made against you and your business. The costs and not to mention the time involved with a Professional Indemnity insurance claim can have a significant impact on your business.
Things like your legal fees, time away from your business and the potential impact on your business’ reputation all things which Professional Indemnity insurance can provide protection for. It’s an investment in keeping your professional business around for the long haul, something which all small business owners strive for.
Could this happen to your business?
No matter how good you are at your job, we’re all human and we all make mistakes. Professional Indemnity Insurance allows you to cover yourself if and when you do slip up in your normal course of work.
Here are a couple of claims** examples…
Not doing it by the book:
A bookkeeper installed new accounting software for which the bookkeeper had no experience using. This resulted in a number errors and omissions which had a financial impact on one of the bookkeeper’s customers. They claimed $25,950 in damages and the claim was paid in full by the insurer.
A migration agent mistakenly lodged an incorrect visa application on behalf of a client. In order for the client to remain in Australia, they had to submit a different visa and the client had to leave the country briefly to activate this new visa. The claim of nearly $10,000 was paid to cover the cost of the new visa and flights for the client, less the retainer fee.
**The provision of the claims examples are for illustrative purposes only and should not be seen as an indication as to how any potential claim will be assessed or accepted. Cover for a claim will depend on the specific circumstances around the loss and would be subject to the terms and conditions of the policy concerned. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained in this article is general only. Coverage for claims on the policy will be determined by the insurer, not BizCover, and will depend on the specific facts and circumstances involved.
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