Professional Indemnity Insurance at a glance

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 it?

Professional indemnity insurance is mandatory in some industries, such as medicine, accounting, law and financial advisers – with the requirements differing from state to state.

It is recommended for anyone who is providing professional services or advice in exchange for a fee – like, Real Estate Agents, Surveyors, Doctors, Architects, Accountants, Graphic Designers, IT Consultants, and more. Regardless of your legal obligation, it’s often a customer requirement that you have this cover in place.

What 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:
Type of cover Potential benefits
Civil liability Civil liability to a third party arising out of the conduct of their professional business.
Inquiry costs The cost of defending an inquiry by a regulatory body into the professional conduct of the insured.
Defence costs The costs involved in defending a claim triggered by the policy.
Fidelity cover Direct financial loss of the business caused by the dishonest or fraudulent conduct of an employee which is first discovered during the period of insurance.
Advancement of costs and expenses Additional costs and expenses incurred during a claim.
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.
  • Liability which results from fraud and dishonesty.
  • Depending on your occupation, third party bodily injury/property damage.
  • Unpaid fees.

Land Surveyor

Background: Surveyor was contracted to a mine site to mark out the piling footings every 4 metres for the stockpile conveyor. The Mining Company discovered pile numbers had been set-out by every 5 metres by surveyor in error.

Result: The Mining company had to demolish the piles, redesign and construct new the piles in the correct position. The Mining Company sue the Land Surveyor for their professional negligence and seeking costs of $360,000.

The Land Surveyor was able to claim cover under the civil liability and defence costs sections of their Policy. Payment: $50,000.

Important note – the information provided here is general advice only and had been prepared without taking into account your objectives, financial situation or needs. A product disclosure statement (PDS) is available from your insurance broker. You should consider the PDS in deciding whether to acquire, or continue to hold, business insurance.

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