What is Professional Indemnity Insurance?

 
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Professional indemnity insurance protects businesses and individuals who provide professional services to clients from the legal costs and claims for damages that may arise from an act, omission or breach of duty in the course of their business.

Professional indemnity insurance is designed for professionals who provide advice or a service to their customers. If a client alleges you've made a mistake, overlooked a critical piece of information, misstated a fact, or if the client has misinterpreted you in the course of your work, and this results in a financial loss for them, 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 finances and your reputation.

A professional indemnity claim could result from:

  1. Negligence in providing professional services
  2. Legal costs of defending actions related to professional services
Regardless of the merit of such a claim, professional indemnity insurance will pay for your legal defence as well as any judgments or settlements you or your business may have to pay the suing party, up to stated policy limits.

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Typical cover

Depending on the policy you choose, you could be covered for:

  1. Damages and claimant costs awarded against you
  2. Legal and court costs
  3. Claims investigation costs
  4. Court attendance costs
  5. Public relations costs

The following are typically not covered:

  1. Intentional damage
  2. Known claims and circumstances
  3. Fraud and dishonesty
  4. Bodily injury/ property damage

How much cover do I need?

Policies may offer cover from $250,000 to $10 million. When considering how much cover you will need, consider the following factors:

  1. What are the potential risks and what could be the potential costs to rectify any mistakes?
  2. What is the value of the work you perform?
  3. Are there any statutory requirements for your profession?
  4. Does your professional body have any requirements for membership? For example, accountants are required to have a minimum of $2 million of cover to join the CPA.
  5. What could be the legal and investigation costs of any action taken against you?
As your business grows it is important to assess your exposure to risk and increase your level of cover accordingly.

This is general information only and does not take into account your personal objectives, financial situation or needs. You should consider the relevant PDS available on this website prior to purchasing any product. Choosi offers insurance products from a range of brands but does not compare all products available in the market.



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