Professional Indemnity Insurance

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Professional Indemnity Insurance

Professional indemnity (PI) insurance provides financial protection for anyone with specialised skills or qualifications, who is paid for giving advice to others. Its purpose is to insure you for your legal costs and any potential damages you may have to pay if one of your clients makes a claim against you for negligence, error or misrepresentation.

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PI insurance isn't just for 'professionals' in the traditional sense – it can be equally important for tradespeople, contractors, medical practitioners, IT specialists, therapists and many others. If you have knowledge or expertise which you have acquired either through training or study, which means that people rely on and pay for your advice and expertise, you could be at risk.

PI insurance can be combined with other business insurance policies to provide you with complete, tailored protection for your business and managers. Our skilled advisors can give you expert advice and put together a comprehensive package to meet your specific needs.

Why do I need professional indemnity insurance?

PI insurance provides you with cover against a civil law claim that a client has suffered financial loss as a result of the advice or service you have given them. No matter how skilled or experienced you are, there is always the possibility that a client will believe you have made a mistake which has cost them money. Even if their claim is rejected in court, the costs of defending your case could be substantial, and you may not be able to recover those costs within an affordable timeframe, if at all.

A successful negligence claim could lead to the award of thousands or even millions of dollars in damages. Since many practitioners and smaller businesses simply couldn't afford to pay these sums, PI insurance is considered vital for the protection of both consumers and businesses.

Some professionals, for example lawyers, accountants and tax agents, are required by law, or their governing professional bodies, to take out PI insurance. It may be necessary for you to have a professional indemnity insurance policy in order to receive or renew your accreditation, qualification or licence. If you offer services to larger organisations, charities or government organisations they may require you to have it in place before they will work with you.

How does professional indemnity insurance work?

PI insurance is a 'claims basis' insurance, which means that you are protected for claims which are made during the period covered by your policy, relating to advice or service which you have given during the policy's lifetime. In some cases it is possible to buy cover with a retroactive start date, which protects you against claims relating to advice given between the agreed date and the start of your policy (provided that you are not aware of the claim at the time you take out your insurance).

Even after you retire or stop providing your service you may need to keep your cover in place for a period of time, in case a client makes a claim at a later date. This could be necessary for a few months or several years, depending on the type of advice you give and the statute of limitations which applies to your profession.

The amount of PI insurance you need will be dictated by the nature of your work and the size of your business. Depending on the policy you choose your cover limit can be either 'per claim', or as an aggregate amount during the life of the policy. This means that you may be able to 'reinstate' your cover after making a claim, provided that you have not claimed the full amount of your insurance, but that the amount you have already received will be deducted from your remaining insurance.

PI policies can be 'costs inclusive' or 'costs exclusive' (also called 'costs in addition') to your policy limit. Costs exclusive policies offer you a higher level of cover, as you can claim for the costs of defending a legal case in addition to any damages you may have to pay, even if the damages reach your policy limit.

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The information on this website, brochures and other documentation is of a general nature only and does not take into account your personal financial situation, needs or objectives. Therefore before you decide to buy any insurance product it is important that you read its Product Disclosure Statement and Financial Services Guide to make sure the product is appropriate for your needs.