Professional Indemnity Insurance At A Glance
Introduction
As a business owner, you pride yourself on delivering the results your clients expect, every time. However, despite our best efforts, mistakes can (and do) occasionally happen. You don’t want to put everything you have worked so hard for at risk; this is why professional indemnity insurance is essential.
What is Professional Indemnity Insurance?
What is Professional Indemnity Insurance?Professional indemnity insurance provides cover for you and your business if you or your employees’ actions cause a loss for one of your clients. Often, professional indemnity insurance is what prevents a business with an error from losing everything.
Is Professional Indemnity Insurance Mandated?
There are some fields where a professional indemnity policy is required. These include.
- Medicine
- Financial advising
- Accounting
- Law
The precise details of mandatory cover vary from state to state. Consult with a representative from your state to find out more.
Additionally, a professional indemnity policy is typical for those whose work ticks off boxes in any of the following:
- A profession that is a part of a collective organisation
- A profession where you offer clients advice
- Professions that involve teaching and training
- A profession where you create designs for clients
- A client has requested you have PI cover to take a contract
If My Profession Does Not Require Professional Indemnity Cover, Do I Still Need It?
Professional indemnity insurance is a highly recommended safety net for owners of all manner of businesses. Accidents and unexpected mistakes are a part of life for everyone. Because you must be prepared for the unexpected, attaining this type of insurance cover will give you peace of mind and could save you thousands of dollars as well as your business’ reputation.
Key Statistics
- The 2019 report from the Insurance News reveals that the ratio of professional indemnity claim estimates grew 42.2 per cent totalling $2.38 billion.
- The same Insurance News 2019 report shows professional indemnity, as well as public and product liability claim payouts, totalled $2.03 billion in 2017, a rise of 22.5% over the previous year.
- An APRA report explains that the 2016 underwriting year had a total of 701,000 professional indemnity risks written.
What Occurances Will Professional Indemnity Insurance Cover?
While specifics often differ from policy to policy, most professional indemnity insurance policies can cover:
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What Are the Typical Exclusions of a Professional Indemnity Policy?
Expenses that your professional indemnity policy does not cover will depend on the individual policy. Generally, the following exclusions apply:
- Pollution
- Costs incurred because of fraud on the part of the insured
- Unpaid fees
- Commercial liabilities
- Third-party bodily injury and property damage
- Contractual liabilities
Case Study
A builder miscalculates the necessary supports to a foundation. As a result, the foundation slab cracks and there is damage to the property. Without professional indemnity insurance, the builder is liable for between $150,000 to the total value of the home. By carrying professional indemnity insurance, the builder will not have to pay out of pocket to repair damages.
Please be aware this data is not a substitute for professional advice. It is an overview of topics frequently involved in professional indemnity insurance and is for informational purposes.
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