Professional Indemnity Insurance
“If you own a business, you can be liable for damages or injuries to another person or property… consider professional indemnity insurance for your business if the likelihood of legal action is high. "
Australian Government, Business.gov.au
What Is Professional Indemnity Insurance?
Anyone can make a mistake – but if your business is found liable for negligence, the costs can be financially devastating.
Not only can it lead to an expensive lawsuit, but your business’ hard-earned reputation may be damaged as a result.
That’s why professional indemnity insurance matters – for help protecting your assets and brand if your advice causes a client to take legal action against you
Who Should Consider Insurance?
Professional indemnity insurance is mandatory in some industries, such as medicine, accounting, law and financial advisers – with the requirements differing from state to state.
But even in cases where it’s not required by law, it’s recommended for anyone who is providing professional services or advice in exchange for a fee – like, graphic designers, IT consultants and more. Regardless of your legal obligation, it’s often a customer requirement that you have this cover in place.
Who Can It Cover?
As a wide-ranging insurance solution, professional indemnity cover may include anything from accidents to errors and omissions. Depending on your policy, professional indemnity insurance can cover:
Advancement of costs and expenses
What Usually Isn't Covered?
Exclusions, the excess you need to pay and limits of liability can vary greatly depending on your insurer. Policies generally won’t include cover for:
Contractual or commercial liabilities
Liabilities which results from fraud and dishonesty
Michael is an engineer who designs the supporting foundations of a residential property. He makes an error with the site calculations – which leads to the slab cracking and damage to the property of the owner.
His company is liable for this loss, which could be anywhere between $150,000 up to the full value of the house. But because Michael has professional indemnity insurance, he’s covered for this amount – as well as any legal expenses if the matter goes to court.