Professional Indemnity Insurance
Professional indemnity insurance relates to claims that your professional advice or services caused a client financial loss. These claims often allege negligence, an error or an omission.
Some professions are required to hold this cover as a condition of registration or membership. Others take it out because clients or contracts ask for it.
Who this insurance may suit
- Architects, engineers and building designers
- Accountants, bookkeepers and financial professionals
- Consultants and project managers
- IT professionals and software developers
- Health and allied health practitioners
- Real estate agents and property managers
- Marketing and design agencies
Why this cover may be important
A client who believes your advice caused them loss may seek compensation, even where you consider the work sound. Defending that kind of dispute can take time and money.
Professional indemnity is usually written on a claims made basis. That means the policy in force when the claim is made is generally the one that responds, which makes continuous cover important.
Potential areas of cover
Cover varies between insurers and policies. Depending on the policy, cover may include:
Civil liability
Cover may include compensation you are legally liable to pay a client for a breach of professional duty.
Defence costs
Legal costs of investigating and defending a claim may be covered, sometimes in addition to the limit and sometimes within it.
Retroactive cover
Some policies cover work done before the policy started, back to a retroactive date, subject to disclosure of known issues.
Run-off cover
If you retire or close the business, run-off cover may be available for claims made later about past work.
Inquiries and investigations
Certain policies may contribute towards costs of responding to a regulator or professional body, within stated limits.
Common risks
- An error in a design, report or calculation
- Advice that a client says led to a financial loss
- Missing a deadline that affects a client's project
- A misunderstanding over the scope of work
- Loss of client documents or data
- Breach of confidentiality
What may not be covered
Every policy has exclusions, limits and conditions. Some common considerations include:
- Circumstances you know of before the policy starts are generally excluded, so disclosure matters.
- Claims made cover means a lapse in cover can leave earlier work unprotected.
- Bodily injury and property damage are usually dealt with under public liability instead.
- Contractual warranties or guarantees beyond your legal duty may not be covered.
- Fines and penalties are often excluded or restricted.
Always read the Product Disclosure Statement and policy wording. Your broker can explain how they apply to you.
Why work with Tasman Insurance Group
- We take time to understand your business or circumstances before discussing cover.
- Where applicable, we approach suitable insurers and compare the options available.
- We explain exclusions, limits and excesses in plain English before you decide.
- We help with changes during the year, renewals and claims.
Professional Indemnity Insurance FAQs
What does claims made mean?
It means the policy that responds is the one current when the claim is first made against you and notified to the insurer, rather than when the work was done.
Is professional indemnity compulsory?
For some professions it is a requirement of registration, licensing or membership. For others it is optional but may be required by clients or contracts.
What happens when I retire?
Claims about past work can still be made after you stop practising. Run-off cover may be available to respond to those claims. A broker can talk through your situation.
Does professional indemnity cover a client's injury?
Usually not. Injury and property damage claims are generally handled under public liability. Professional indemnity focuses on financial loss from advice or services.
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Ready to talk about professional indemnity?
Request a quote or call us. We'll ask about your circumstances and discuss the options available.