There was a time when professional indemnity insurance was thought to only apply to doctors or lawyers. Although these professional most certainly do require indemnity cover, there are a number of professions which also need the financial protection of professional indemnity insurance. Without cover in place, a single indemnity claim could have a devastating impact on your business. So, what do you need to know about this policy? Today, we’ll be exploring professional indemnity insurance Australia to get you familiar with this form of cover.
What is professional indemnity insurance?
Professional indemnity insurance is designed to protect you and your business if a third party makes a claim against you following a financial loss. This could be due to alleged negligence or breach of professional duty which has occurred due to an act, error or omission while you were carrying out your professional duty. Professional indemnity insurance will apply to contractors who provide professional advice or services as a part of your work – as you can see, this applies to a wide range of professions!
Providing misleading or incorrect advice
Loss or damage to documentation or data
Providing incomplete or incorrect work
Breach of confidentiality or contract
Fraud or dishonesty
Defamation, slander or libel
Professional liability insurance will help cover the costs association with a liability claim and it’s important to remember that there can be any costs involved. If a claim is successful, then your indemnity insurance may provide cover for damages or costs awarded to a third party. Not only does it cover the cost of damages it can also cover legal bills involved in defending a claim. Even if a claim by a third party is unsuccessful, there could be lengthy and expensive legal proceedings involved that you would otherwise have to pay for if you don’t have indemnity cover.
Other than covering expensive legal bills and associated costs, professional indemnity insurance can also help to protect the reputation of your business by supporting you the costs associated with hiring a public relations specialist.
The cover offered by your professional indemnity insurance will depend on the specific policy you take out. Make sure you read the fine print, including the inclusions and exclusions, to make sure that your risks are adequately covered. Your insurance broker will also be able to take a look at your cover so you can be confident that you won’t get any surprises at claim time.
As we’ve already discussed, there are some people whose professional bodies require them to have professional indemnity insurance in order to practice. Just some of these professions include:
If your professional body requires compulsory professional indemnity insurance, it’s obvious that you need this cover in place. Even if you don’t have a professional obligation to have indemnity insurance, this policy is designed to protect you financially from the devastating impact of a claim.
The legal costs associated with defending a claim can be expensive and without proper representation in place, you also risk damaging your reputation. Remember, even if a claim made by a third party is unsuccessful, you may still be facing significant legal costs after hiring someone to represent you. If it’s a lengthy case, the legal costs may be too high and you may simply not be able to afford good legal representation. Without indemnity cover in place, many professionals may have to settle the claim as quickly as possible to avoid an expensive process. However, with indemnity cover in place you have legal avenues available to you to defend yourself appropriately against a claim
If you’re found liable for losses after a successful claim, you could potentially find yourself in a situation where you have no option but to declare bankruptcy. Indemnity insurance offers you a safety net which means you don’t need to shoulder the costs yourself.
Although professional indemnity insurance provides robust protection, there are some things that your indemnity cover won’t protect you for. Common exclusions include:
Illegal or dishonest behaviour – if an indemnity claim proves that illegal activity has taken place or that your actions were dishonest or deliberate, your policy won’t cover this.
Prior circumstances – if there were circumstances prior to taking out the policy that had the potential to result in a claim and the insurer wasn’t informed, your policy is unlikely to cover you
Punitive damages – if additional damages or fines are imposed due to your actions being considered especially negligent, your cover won’t extend to these.
Prior to the retroactive date – if an incident occurred prior to the retroactive date of your policy, you won’t be covered
Geographical limit – for you to be covered by your indemnity insurance, the claim must have occurred within the geographical limits of your policy.
Contractor Cover are the experts when it comes to offering insurance cover, including professional indemnity insurance, to contractors across Australia. We understand that you need to be protected financially and we’ve conveniently bundled the most common insurance policies for contractors into a single package. We’re backed by one of the largest insurers in the world which means we can bring you high quality insurance cover at a great price. If you’re not sure if our unique contractor package applies to you, just give us a call!
For a professional indemnity insurance quote Australia, contact Contractor Cover today on 1300 438 268.