Any one can make a mistake – but if your business is found liable for negligence, the cost can be financially devastating. Not only can it lead to expensive law suit, but your business hard earned reputation may be damaged as a result.
Thats why professional indemnity insurance matters – help protecting your assets and brand if your advice or services cause a client to take legal action against you.
Professional Indemnity insurance is mandatory in some industries. such as medicine, accounting, law and financial advisers – with the requirements differing from state to state.
But even in cases where its not required by law, its recommended for anyone who is providing professional services or advice in exchange for a fee – like graphic designers, IT consultants and more. And regardless of your legal obligation, its often a customer requirement that you have this cover in place
”Professional indemnity insurance for your business if the likelihood of legal action is high
Australian Government . business.gov.au
In 2014 alone, professional indemnity and public liability claims increased by 27.7 %
( Insurancenews.com.au ”Claims up ,premium down for PI and PL”2015)
$ 1,362 million of gross premium during the 2016 underwriting year
(APRA, National Claims policy database 2017)
701,000 PI risk written in 2016 underwriting year.
(APRA, National Claims policy database 2017)
As wide – ranging solution, professional indemnity cover may include anything from accidents to errors and omissions.
Depending on your policy, professional indemnity insurance can cover the following
Civil Liability to a third party arising out of the conduct of their professional business
The cost of defending an inquiry by regulatory body into the professional conduct of the insured
The cost involved ind defending a claim triggered by the policy
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
Additional costs and expenses incurred during a claim
Exclusions, the excess you need to pay and limits of liability can vary greatly depending on your insurer. Polices generally wont include cover for
Michael is an engineer who designs the supporting foundations of residential property. He makes an error with the site calculations – which leads to the slab cracking and damage to the property of the owner.
His company is liable for this loss, which could be anywhere between $150,000 up to the full value of the house.
But because Michael has professional indemnity insurance, he’s covered for this amount – as well as any legal expenses if the matter goes to court.
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