No matter how professional or experienced your business is, there’s always the risk that something can go wrong. You could give the wrong professional advice to a client, which leads them into trouble, or an employee could make a mistake in their service that negatively impacts a customer.
Luckily, professional indemnity insurance* could provide you with financial protection in the case that legal action is taken against you.
Let’s break down how this type of insurance can help to cover you in such unfortunate, but possible, scenarios.
Professional indemnity insurance protects professionals who provide advice or services to other businesses or individuals. Should you make a mistake in this advice or service, this type of insurance may help cover any defence costs that come from potential damages claims.
Despite your best intentions, no person – or business – is immune from making mistakes. That’s why many associations require or recommend that professionals are covered with industry-specific professional indemnity insurance.
So, what can go wrong? Some common examples of breaches of duty and professional mistakes can include:
Professional indemnity insurance policies cover your business against claims arising from (actual or alleged) negligent acts or omissions you may make in providing professional services and advice. Your cover includes compensation, legal fees and investigation costs.
Typically, professional indemnity insurance can financially cover:*
Be sure to check the Product Disclosure Statement (PDS) provided by your professional indemnity insurance broker so you know exactly what you’re covered for. Different insurance products may provide different cover.
All professionals should understand their policy’s exclusions, so they know what they aren’t covered for. Typically, policies will not cover claims arising from:*
Have the below details handy when completing a quote:
Your type of business and its services will affect the level of professional indemnity insurance you may need. Therefore, it’s vital to provide all the information you can about your business when completing a quote and obtaining cover.
Additionally, be sure to disclose any past complaints or claims made against you to your potential insurer. Even if you’re doubtful, it’s still best to disclose any information you can, as any omissions of past claims (whether intentional or not) can invalidate or limit your cover.
When it comes to running your own business, it’s important to consider all types of insurance, including:
Suppose your business is found liable for the injury, death, loss or property damage to a third party. In that case, this type of insurance covers any legal fees and compensation.
If your business’ products cause harm, loss or damage to your customers, this type of insurance can cover the associated legal fees and compensation awarded.
Professional indemnity insurance is highly advisable for any business that provides advice or services to clients. If you make an error that causes your client damage, injury or loss, you could be held liable, which can cost you a lot of money. Professional indemnity insurance may be mandatory for some professionals in Australia, like engineers and architects.
If a client takes legal action against you, you’ll need to fork out the money to cover all legal defence costs from your own pocket, as well as the potential costs of damages awarded to the other party.
Public liability insurance financially protects businesses against claims made by third parties for damages, loss or injury. For example, this type of cover protects you if a customer slips and injures themselves on your premises. Professional indemnity insurance covers claims made by clients if your professional advice or recommendations cause them damages, loss or injury.
Depending on your business, you might find both cover options essential.
The cost of this insurance will depend on a range of variables, including your profession, the size of your business and whether you’ve had any previous claims. To find out how much you might need to pay for this type of cover, you can use our free online comparison tool to compare your options.
As our General Manager of Business Insurance, Stephen Zeller understands how professional indemnity insurance can protect professionals like doctors and personal trainers who provide advice or services to others. Stephen says this type of insurance can reduce financial exposure if a client claims your advice or services caused them losses.
With over 30 years’ experience in the financial services industry, including 27 years at the Bank of Queensland, Stephen is Compare the Market’s leading expert in business insurance. He’s also a long-time customer rights advocate and an allied member of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF).
Whether you’re a freelancer or run a small business, we can help you compare professional indemnity insurance.
Our service makes it quick and easy for you to weigh up policy prices, features and benefits side-by-side so you can find great value. Simple!
*As with any insurance, the cover is subject to the terms, conditions and exclusions contained in your policy document. The information contained on this webpage is general only and should not be relied upon as advice.
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