Professional Indemnity Insurance
What is professional indemnity insurance?
Professional indemnity (PI) insurance provides financial protection for anyone with specialised skills or qualifications, who is paid for giving advice to others. Its purpose is to insure you for your legal costs and any potential damages you may have to pay if one of your clients makes a claim against you for negligence, error or misrepresentation.
PI insurance isn’t just for ‘professionals’ in the traditional sense – it can be equally important for IT specialists, therapists and many others. If you have knowledge or expertise which you have acquired either through training or study, which means that people rely on and pay for your advice and expertise, you could be at risk.
Whether you need PI insurance will depend on the nature of your occupation, the services you provide and the types of project you work on.
Why do I need professional indemnity insurance?
PI insurance provides you with cover against a civil law claim if a client has suffered financial loss as a result of the professional advice or service you have given them. No matter how skilled or experienced you are, there is always the possibility that a client will believe you have made a mistake which has cost them money. Even if their claim is rejected in court, the costs of defending your case could be substantial, and you may not be able to recover those costs within an affordable timeframe, if at all.
A successful negligence claim could lead to the award of thousands or even millions of dollars in damages. Since many practitioners and smaller businesses simply couldn’t afford to pay these sums, PI insurance is considered to be important for the protection of both consumers and businesses.
Some professionals, for example lawyers, accountants and tax agents, are required by law, or their governing professional bodies, to take out PI insurance. It may be necessary for you to have a professional indemnity insurance policy in order to receive or renew your accreditation, qualification or licence. If you offer services to larger organisations, charities or government organisations they may require you to have it in place before they will work with you.
How does professional indemnity insurance work?
PI insurance is a ‘claims made’ insurance, which means that you are protected for claims which are made during the period covered by your policy, relating to advice or service which you have given during the policy’s lifetime. In some cases it is possible to buy cover with an earlier retroactive date, which protects you against claims relating to advice given between the agreed date and the start of your policy (provided that you are not aware of the claim at the time you take out your insurance).
Even after you retire or stop providing your service you may need to keep your cover in place for a period of time, in case a client makes a claim at a later date. This could be necessary for a few months or several years, depending on the type of advice you give and the limitations period for claims to be brought.
The amount of PI insurance you need will be dictated by the nature of your work and the size of your business. PI policies can be ‘costs inclusive’ or ‘costs exclusive’ (also called ‘costs in addition’) to your policy limit. With costs exclusive policies, you can claim for the costs of defending a legal case in addition to any damages you may have to pay, even if the damages reach your policy limit. Costs inclusive policies have the maximum amount paid by the insurer to include costs of defending a legal case within the same limit.
How much will my professional indemnity insurance cost?
The cost of your PI insurance premiums may depend upon:
- The kind of work you do and the financial risks you face
- The turnover of your business
- The amount of cover you want to take out
- Whether you opt for a retroactive start date
- Your chosen amount of excess
- Whether you choose to include or exclude costs from your policy limit
You can take professional indemnity insurance as part of our Office insurance, brought to you in partnership with Allianz. Combine it with a range of other types of business cover in an Office Pack, which has been designed for office-based professionals.
Professional Indemnity Insurance
For many companies, insurance is a fundamental part of doing business. Public liability cover, for example, may be a basic requirement of your operating licence. In many cases your potential clients, suppliers or investors will want to know that the financial stability of your business is protected. You may need to provide evidence of your insurance arrangements as part of the tender process for contracts, or during negotiations for credit lines or funding.
Even if you aren’t required to take out business insurance, it’s prudent to do so. You’ve worked hard to build up your business and without protection you could lose everything you’ve achieved to a single event, like a storm or fire.
Business insurance can cover you for many types of risk, from theft and damage to lost income or liability claims.
Your business is unique, and so are the opportunities and risks you face. Your insurance needs may depend on a wide range of factors, including
- The nature of the work you do
- The type, value and location of your assets
- Whether you manufacture products or carry high volumes of stock
- Whether you provide advice which may be relied upon by your customers
- Whether you work in public spaces or on customers' premises
- The legal and management structure of your company
- Whether you have employees, and the size of your team
- The physical, financial or reputational risks which threaten your company
The most popular types of business insurance include:
- Public or product liability
- Asset or property insurance
Both these essential insurances are options within our Small Business Advantage insurance, available online.
Other common business insurances include professional indemnity and management liability insurance, which can also be incorporated into your Small Business Advantage policy.
There are also specialised insurances available to mitigate more specific threats, such as transit insurance, machinery breakdown and electronic equipment. If you’re looking for more specialised policy, simply contact our friendly team on 1300 467 872 for information.
You could have immediate cover for all your major risks, without waiting for quotes from brokers. Our Small Business Advantage insurance package gives you the option to take out comprehensive protection against loss or damage to your property, interruption to your business and public or product liability claims plus a wide range of other threats.
If you need more specialised business insurance cover, 1300 Insurance is still the smart choice. We work with every major provider of business insurance in Australia and have close relationships throughout the global insurance marketplace. Our advisors have extensive risk management expertise and detailed knowledge of all the diverse business insurance products available in the market.
We'll also guide you through the underwriting process and support you throughout the lifetime of your insurance policy with a dedicated account manager, claims support and ongoing information.
Our small business insurance package is brought to you in partnership with leading Australian insurance provider Allianz. It enables you to tailor your business cover to suit your needs, all in a single, affordable policy. It’s designed to suit more than 2,000 professions and offer protection against all the major risks faced by most businesses, including theft, damage or business interruption due to natural disasters, and public or product liability insurance.
We also offer packages designed for office-based professionals and for tradespeople and service providers.
The cost of your small business insurance policy is your monthly premium. The amount you pay may depend a number of factors, including
- The type of work your business does
- How many employees you have
- Where your business is located
- How much stock you carry, if any
- The nature and value of your business property
- The size of your business and your annual profits
- Which types of cover you choose to take out.
All these things can determine the type of risks you face and the likelihood you will need to make a claim, which is the information used to calculate your premium.
You can find out what your premium amount will be by clicking on the "Get a Quote" button below.
Our small business online insurance has a 14-day cooling off period. So if you have second thoughts after buying your cover you can cancel it within two weeks and get a full refund, provided that you have not made a claim.
As long as you pay your premiums when they are due, your small business online insurance policy will remain in place for the period shown on your policy document.
If you do not pay your premiums on time we may be entitled to reduce or refuse to pay a claim and cancel your policy.
You can cancel your policy at any time. The cancellation will be effective on the date we receive your request and an administration fee will apply.
If you decide to cancel your policy, we will refund the proportion of your premium relating to the unused period of insurance, less the administration fee and any non-refundable government charges. However, we will not refund any premium if you have made a claim.
When you buy your small business insurance through 1300 Insurance in partnership with Allianz, you can spread the cost of your premiums without paying extra. Whether you opt for annual or monthly instalments, you’ll pay the same total premium to protect your business.
Premiums payable by instalments may be subject to minor adjustments (upwards or downwards) due to rounding, and financial institution transaction fees may apply.
It’s really important that you keep up to date with your premium payments. If you do not pay your premiums on time we may be entitled to reduce or refuse to pay a claim and cancel your policy. This means you will not be covered for loss, damage or interruption to your business due to theft or natural disasters, or for public or product liability claims or any other type of cover you have taken out.
Generally, you can claim a tax deduction for the premiums your business pays on most types of business insurance. However, this is not always the case for all types of insurance, so it’s important that you contact your tax advisor for advice on the individual circumstances of your business.
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We try very hard to respond to every question we get in a timely manner, but if your question is urgent you might want to call us on 1300 467 872.