Who needs Professional Indemnity insurance?

Whether you’re an architect, an IT consultant or or a real estate agent, Professional Indemnity insurance* is something you may wish to consider to help safeguard your business.

Your clients come to you because they trust your professional advice and expertise. However, even if you’ve been an expert in your field for years, unexpected accidents can still occur. This is where Professional Indemnity insurance comes in.

What is Professional Indemnity insurance?

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. This type of insurance may also cover the legal costs associated with the claims.

Related: What is Professional Indemnity Insurance?

Why is Professional Indemnity Insurance important?

No matter how long you’ve been providing your professional services for, mistakes can happen.

Even if these mistakes are completely accidental, they can impact your clients and potentially lead to costly lawsuits. Professional Indemnity insurance provides a financial safety net if someone brings a claim against you for a mistake, oversight or breach in your duties.

Professional Indemnity insurance may be helpful if:

• Your business provides professional advice or services: Such as consulting, expert recommendations or technical support.
• You handle sensitive or confidential information: Such as client medical records, financial data, or legal files.
• Your work may lead to disputes over quality or delivery: For instance, architects, project managers or engineers whose work impacts timelines or compliance.
• Your professional body or industry regulator requires it: Such as real estate agents in NSW who are required to hold Professional Indemnity insurance.

Is Professional Indemnity Insurance a requirement?

Generally speaking and depending on your industry, this insurance may be mandatory to practise legally or to join certain professional associations. For example:

• Real estate agents in New South Wales are legally required to have coverage.
• Many contractor agreements specify minimum levels of cover before engagement.
• It’s also a common requirement for memberships in professional bodies like CPA Australia, AHPRA, or Engineers Australia

Who should carry Professional Indemnity insurance?

Any business or professional that offers advice or a specialist service may wish to consider holding this type of cover. Industries that commonly benefit from Professional Indemnity insurance include:

• Accountants and Tax Agents: Errors can occur when handling financial advice, compliance reporting and tax filings. These errors can have legal and financial implications.
• IT Consultants and Tech Specialists: Offering incorrect systems advice or mishandling data or software implementation may affect business operations or data security.
• Architects and Engineers: Technical drawings, structural designs or compliance-related plans that must meet safety and legal standards, or there could be ramifications.
• Real Estate Professionals: Errors can occur and disputes can arise when offering guidance on high-value property transactions and lease negotiations.
• Allied Health and Wellness Professionals: Client outcomes could be negatively impacted if physical or psychological services (like physiotherapy, psychology or massage therapy) are not carried out correctly.
• Professional Consultants: Providing specialist advice can potentially led to disputes over results or even intellectual property.

What does Professional Indemnity insurance typically cover

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 are some examples of Professional Indemnity insurance claims?

A real-life claim involved an architectural drafting service contracted to design a dual occupancy building. Initial drafts were approved and construction began. However, the final build failed to meet open space standards and could not receive an occupation certificate. Modifications were required, including converting the driveways into environmentally compliant structures. The compensation request amounted to a total of $35,650.00 to cover the costs associated with the required modifications to bring the dwelling into compliance.

Fortunately, as the drafting service held insurance, their insurer covered $29,585 of the compensation. Without coverage, the business would have had to pay the full amount out of pocket.

How much does Professional Indemnity insurance cost?

The cost of your Professional Indemnity insurance policy is determined by a variety of factors which are unique to your business. 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
• Claims history.

Get a quote for your Professional Indemnity insurance today

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, Cyber Liability and Management Liability insurance, among many other types of business insurance.

Get a quick and easy business insurance quote today through our online platform, or give our friendly team a call. For on the go cover, go BizCover.