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. Professional Indemnity insurance can also assist with the legal costs associated with responding to or managing claims which are covered by the policy.

Related: What is Professional Indemnity Insurance?

What kind of professions need to consider Professional Indemnity insurance?

Professional Indemnity insurance is there to protect those who give professional advice or services. There are many different types of professions which fall into this category, so we’ve narrowed it down to just a few of the typical ones which may require it.

• Accountants
• Allied health professionals
• Architects
• Bookkeepers
• Civil engineers
• Consultants
• Disability workers
• Engineers
• Finance and mortgage brokers
• Hair and beauty services
• IT professionals
• Land surveyors
• Marketing specialists
• Massage and alternative therapists
• Migration agents
• Nurses
• Personal trainers
• Pet professionals
• Project managers
• Psychologists
• Real estate agents
• Recruitment consultants
• Social workers
• Tax agents
• Tutors
• Yoga teachers.

Part of your responsibility as a professional is to deliver appropriate and professional advice that suits and help your clients’ needs. This could be anything from engineers providing advice on a new structure to personal trainers creating a custom exercise plan for their client.

Your Professional Indemnity policy is there to provide financial protection if a client were to make a claim against you for negligent acts or an omission in the delivery of your professional advice or services.

Why should I consider Professional Indemnity insurance?

Take a moment to consider the time and money that is involved with a claim, from legal fees associated with your defence to possible client compensation. The claim could lead to significant financial losses for your business. However, with Professional Indemnity insurance, you’re helping to safeguard your business from these kinds of scenarios.

Related: Do I need Professional Indemnity Insurance?

Is Professional Indemnity insurance a requirement?

Depending on the industry you operate within, Professional Indemnity insurance may be a requirement to become a member of certain industry boards and bodies. For example, Professional Indemnity insurance is a legal requirement for real estate agents operating in New South Wales.

It is also a common requirement for those undertaking contract work, with minimum levels of cover often outlined.

What does Professional Indemnity insurance typically cover and exclude?

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 does Professional Indemnity insurance not provide cover for?

These are some of the instances when your Professional Indemnity insurance policy will typically not provide cover.

• Claims and circumstances known prior to inception of the policy.
• Contractual disputes.
• Disputes in relation to your professional fees.
• Personal injury or property damage (unless caused by a breach of your professional duty).
• Intentional damage.
• Fraud or dishonesty.

What are some examples of Professional Indemnity insurance claims?

Professional Indemnity claims can come from regular business activities like giving incorrect advice, a miscalculation, inappropriate diagnosis or treatment. It can also include things like blowing out a budget and not delivering on deadlines that you may have promised your client on a project.

This example of a real-life Professional Indemnity claim involves an architectural drafting service that was contracted to design a dual occupancy building for a specific address. The initial drafts were approved, and construction began. However, upon completion of the build, it was discovered that the designed dual occupancy dwelling did not meet the required open space standards. Consequently, it could not be granted an occupation certificate. The sole solution to rectify this issue was to modify the existing driveways within the development, converting them into environmentally friendly driveways with a grass-supported vehicle system. In light of these necessary amendments, the claimant sought compensation from the insured. 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.

As the insured party held Professional Indemnity insurance, the insurer paid $29,585.00 to the insured for the amendments. If the insured had not held this insurance, they would have been liable for the entire amount requested by the claimant.

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. Things like the type of operations your business performs and the level risk your business is exposed to can impact the pricing of your policy.

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.

Related: How much does Professional Indemnity Insurance cost?

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. Jump online or give us a call to receive fast quotes from a range of trusted leading insurers.