When you offer professional advice and services as part of your business, you leave yourself vulnerable to potential indemnity claims. In an increasingly litigious society, it’s important that you have professional indemnity insurance in place to protect yourself from the impact of expensive claims. Today, we take a closer look at the role professional indemnity insurance has in protecting your business.
What is professional indemnity insurance?
Professional indemnity insurance protects you against the costs associated with a third party claim following negligence or a breach of professional duty. It also covers additional costs associated with an indemnity claim, such as legal and public relations costs. An indemnity claim can arise when a third party claims a financial loss, damage to property or injury to a person following an act, error or omission in your professional services.
Is professional indemnity insurance compulsory?
Generally, Australian businesses don’t have a statutory requirement to have professional indemnity insurance in place. However, there are certain professionals which need to have indemnity insurance in place for them to practice according to their professional licencing requirements. For example, accountants, lawyers and doctors are all required to have this policy in place. Make sure you’re familiar with your professional guidelines as they may also specify what level of cover you require.
Why is professional indemnity insurance important?
As we’ve discussed, in some cases indemnity insurance is important because it’s part of your requirements according to your professional body. However, even if it’s not compulsory, indemnity insurance plays an important role in protecting you from potential claims. The financial losses associated with an indemnity claim can be significant and indemnity insurance allows you to access legal assistance and pay for the costs associated with a successful claim. Even if a claim is unsubstantiated, without indemnity cover then you’d have to cover the legal costs of fighting a malicious claim yourself.
How much does professional indemnity insurance cost?
The cost of your indemnity insurance will depend on a number of factors and one of the main considerations will be the type of work you do – the higher the risk of an indemnity claim in your job then the higher your premiums will be. Other factors that your insurer will consider with the cost of your indemnity insurance will be the level of cover you need, the size of your business and your claim history.
Contractor insurance specialists
At Contractor Cover, we specialise in providing insurance, including indemnity cover, to contractors across Australia. We’ve teamed up with the world’s largest insurer to bring you great coverage at a competitive price. To simplify things, we’ve packaged the most common policies together so you can be assured that your areas of risk are covered without the need for multiple policies.
For more information about professional indemnity insurance for your business, contact Contractor Cover today on 1300 438 268 or fill in our easy online enquiry form.