Professional Indemnity Insurance Explained
Professional Indemnity Insurance is designed for professionals who provide advice or a service to their customers. 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 both 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!
A professional indemnity claim could result from:
- Failure to provide promised services
- Being negligent in rendering its professional services
- Providing shoddy, incomplete, or incorrect work
- Making mistakes or oversights
- Accidental omissions
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 necessary 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
Example professions: Health Professions, IT Contractors, Management Consultants, Accountants, Estate Agents etc.
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.