What is Professional Indemnity Insurance?
Do you or your business provide advice or service for a fee? If so, you are likely to have a Professional Indemnity exposure and need special cover.
Professional Indemnity (or PI as it is abbreviated to) is a form of liability insurance, which covers you and your business against claims for financial loss as a result of error, omission or breach of professional duty in the course of your business.
This type of policy generally covers you and your business for claims made against you by your clients, or other third parties who assert that your advice, service or design etc has caused them a financial loss. It includes legal defence costs and compensation amongst other additional policy benefits.
How do I know if I need Professional Indemnity Insurance?
This type of insurance is mandatory for some industries and occupations in Australia - think Accountants, Lawyers, Architects, Engineers, Financial Planners, Insurance Brokers, Consultants and so forth. Professional industries where a particular professional service, design or advice is provided for a fee.
Medical practitioners and other allied health (including some beauty therapy occupations) require a special version of Professional Indemnity called Medical Malpractice.
Professional Indemnity Insurance generally covers you and your business for claims made against you by your clients, or other third parties who assert that your advice, service or design etc has caused them a financial loss.
How much cover do I need?
This can depend on a variety of factors, so it is difficult to provide a standard answer. If you are working in the Private Sector, it is common to see minimum limits of $10mil as a requirement with some larger companies. Government contracts are sometimes a bit lower, with $2mil and $5mil limits as a minimum, again depending on your industry and even what State or Territory you are providing your services in.
Can I combine Professional Indemnity with Public Liability?
This is becoming a popular and smart option with a lot of insurers now offering a Public Liability cover that can be attached to your Professional Indemnity Insurance for office-based, low-risk consultative type occupations.
However, if your business has anything more than a standard office-based risk profile, you really need a tailored Public Liability cover which can be a stand-alone policy or combined with your Business Pack Insurance (depending on occupation).
If you provide any form of professional advice, service or design for a fee, chances are you will have a Professional Indemnity exposure and you should seek advice from your broker to determine what cover is most appropriate for your needs.
This article originally appeared on MeyerInsure Blog and has been published here with permission.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Laura Meyer.