What Is Professional Indemnity Insurance Australia?
Does your business revolve around you providing your professional opinion or advice to others?
Perhaps you’re an electrical engineer who provides designs to a mine site or an accountant who prepares tax returns, or a property lawyer who makes his or her living from giving professional opinions and advice to clients.
If so, it’s important to protect yourself and your business against the possibility of unintentionally making a mistake or providing advice that is found to be flawed or wrong. If this happens to you, and your client experiences financial loss, they could sue you.
Professional Indemnity insurance in Australia will protect you and your business should a claim be made against you. It will protect you against legal costs and claims for damages to third parties, which may arise out of an act, omission or breach of professional duty, by you or one of your staff, i.e. any principal, employee, director, partner or related entity, while acting within the scope of their duties.
Importantly, Professional Indemnity insurance can also protect your reputation. Small businesses often do not have the means to wage expensive legal battles in the event a claim is made against them. As the cost for legal defence is typically in the vicinity of $100,000, many businesses settle quickly.
However, this can be seen as an admission of guilt. Professional Indemnity insurance allows professionals to pursue legal channels to defend themselves and clear their name. This can be vital for professionals whose reputation is central to their business.
Phoenix Insurance Brokers Pty Ltd can help you understand all aspects of Professional Indemnity insurance and work with you to tailor a Professional Indemnity insurance policy specific to your business requirements. Get in touch with our friendly team or simply fill out our Professional Indemnity insurance online quote.
Who Should Consider Professional Indemnity Insurance?
Professionals who take out Professional Indemnity insurance can include:
- Legal counsel
- IT consultants
- Advertising executives
- Estate agents
- Financial advisors
- Management consultants
- Project managers
- Occupational therapists and many more
If you’re in a similar type of profession, and you provide advice or a service to people, and you have partners, staff or volunteers who work with you or for you, it’s important to consider Professional Indemnity insurance.
A claim made against you can be expensive, time-consuming and stressful so having protection in place makes good business sense.
Examples Of Professional Indemnity Insurance Claims In Australia
Below is a list of scenarios that have resulted in Professional Indemnity insurance claims:
- Negligence arising from a breach of professional duty
- Breaches of contract
- Fraud and dishonesty of staff
- Cases of libel, slander or defamation against a third party
- Loss of client documentation
- Mistakes providing a service, such as not auditing a company’s accounts properly, medical malpractice when performing a surgical procedure, or giving poor legal advice.
Do You Need Any Other Types Of Insurance?
Professional indemnity insurance only covers you for one aspect of your business. Businesses also need other types of insurance. At Phoenix, we can provide you with advice on all types of insurance making sure you have the right policies in place for your particular business. Other policies include:
- Office Insurance
- Public Liability
- Management Liability
- Workers’ Compensation
- Plant and Equipment
- Vehicle and Fleet
Professional Indemnity Insurance FAQs
Many employers will not hire contractors without Professional Indemnity insurance as it protects the employer against any errors the contractor may make during the contract.
Not all sole traders need Professional Indemnity insurance. It depends on what type of business you’re in. If you’re an accountant, lawyer, architect or someone who provides professional advice, Professional Indemnity insurance is recommended. However, a tradesperson would be better advised to take our public liability insurance or trades insurance.
The cost of Professional Indemnity insurance depends on a variety of factors such as:
- Type of profession
- Business size
- Business activities involved, and
- Whether a business has had any previous Professional Indemnity claims.
As a rule of thumb when it comes to cost, the greater the exposure to a potential claim, the higher the cost.
It is advisable to have Professional Indemnity insurance in place before commencing work for clients where you are providing professional advice.
Professional Indemnity insurance is not compulsory, however businesses who provide advice or a service are strongly advised to take it out. If someone makes a claim against you, whether they have grounds to do so or not, your assets and your reputation could be in serious jeopardy. Professional Indemnity insurance can help you resolve a claim with minimum impact to your business.
Professional Indemnity insurance protects you and your business against claims of alleged negligence or breach of duty resulting from an act, error or omission when providing opinions or advice to clients. Public liability insurance covers you and your business against claims of injury, or damage to property, or economic loss caused to a third party in connection to your business. For example, if a customer slips and trips while on your business premises.
If your business has customers visiting your premises and you also provide opinions or advice to those customers, both Professional Indemnity and Public Liability insurance may be beneficial.