What Is Professional Indemnity Insurance?
Professional Indemnity Insurance (also known as PI Insurance or Errors and Omissions cover) is a form of business liability insurance that protects professionals against potential risks of claims arising from advice and services provided to their clients.
In simpler terms, if your client suffers loss, be it financial, material or intangible due to your professional negligence or malpractice, Professional Indemnity Insurance covers the legal costs and expenses involved in your defence, as well as any damages or costs that may be awarded.
Anyone can make a mistake – but if your business is found liable for negligence, the costs can be financially devastating. Not only can it lead to an expensive lawsuit, but your business’ hard-earned reputation may be damaged as a result.
That’s why Professional Indemnity Insurance matters – for help protecting your assets and brand if your advice causes a client to take legal action against you.
One of AIB’s expert business insurance brokers can help you find a policy that is best suited to your industry, budget and needs.
Who Should Consider It?
Professional Indemnity Insurance is mandatory in some industries, such as medicine, accounting, law and financial advisers – with the requirements differing from state to state in Australia. However, any professional providing expert advice or services in exchange for a fee should consider purchasing PI Insurance.
This is especially important for:
- Consultants
- Accountants
- IT Specialists
- Engineers
- Architects
- Lawyers
- Doctors & Medical Professionals
- Estate Agents
- Financial Advisors
Freelancers, contractors, and self-employed individuals providing professional services should also think about this coverage. Not only can it offer financial protection, but it can also significantly enhance your credibility as a professional. Some professional bodies and regulators may also require you to hold a certain amount of Professional Indemnity cover.
To ensure you have the right insurance cover for your business, talk to one of our expert business insurance brokers and get the peace of mind that you have the right insurance cover, tailored to your specific needs.
The team at AIB have vast experience with Professional Indemnity Insurance policies and we can ensure you have the cover you need.
What PI Insurance covers
The primary purpose of Professional Indemnity Insurance is to provide cover for liability arising from a breach of professional duty.
Obviously every policy is different and your AIB insurance broker can help you find one that suits your specific needs. Depending on your policy, Professional Indemnity Insurance can cover:
Civil Liability Claims
Covers costs that your business would incur if you need to defend and settle claims from third parties alleging negligence or breach of duty, unintentional infringement of intellectual property, unintentional defamation or loss of or damage to documents.
Inquiry Costs
The cost of defending an inquiry by a regulatory body into the professional conduct of the insured.
Defence Costs
The costs involved in defending a claim triggered by the policy.
Public Relations Expenses
Covers the cost of engaging a public relations consultant (within reasonable limits) to help reduce damage to your reputation following a claim against your business.
Fidelity Cover
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.
Advancement of costs and expenses
Additional costs and expenses incurred during a claim.
However it doesn’t cover areas such as commercial liability or accidental personal injury or property damage and it’s important to note that this PI Insurance is a different cover from Public and Products Liability insurance but often these work hand in hand where advice is being provided to customers.
How Can Professional Indemnity Insurance Protect You?
Why Choose AIB As Your PI Insurance Broker?
Choosing the right Professional Indemnity Insurance is about more than finding a policy. As an experienced PI insurance broker, AIB can help you understand your professional risks and identify cover that is appropriate for your business, industry and contractual requirements.
Specialist insurance expertise
Our experienced brokers understand the professional risks faced across a broad range of industries and can help identify cover suited to your specific exposures.
Access to a wide range of insurers
As your Professional Indemnity Insurance broker, we can explore options from across the insurance market to help find competitive and appropriate cover.
Personalised advice and service
We take the time to understand how your business operates, rather than taking a one-size-fits-all approach to your insurance.
Support when you need to make a claim
If a claim arises, our team can help you navigate the claims process and liaise with your insurer on your behalf.
What is Professional Indemnity Insurance?
Professional Indemnity Insurance, often referred to as PI insurance, is designed to protect businesses and professionals against claims arising from alleged negligence, errors, omissions or breaches of professional duty. Depending on the policy, cover may include legal defence costs and compensation payable to a third party.
What is the difference between Professional Indemnity and Public Liability Insurance?
Professional Indemnity Insurance generally covers claims arising from professional advice or services that cause a client financial loss. Public Liability Insurance is designed to cover claims involving third-party personal injury or property damage arising from your business activities. Depending on the nature of your business, you may need both types of insurance.
What is the difference between PI Insurance and Management Liability Insurance?
PI Insurance primarily protects a business against claims arising from the professional services or advice it provides to clients. Management Liability Insurance is designed to cover certain risks associated with managing and operating a business, which may include claims against directors and officers, employment practices claims and some statutory liability exposures. The exact cover will depend on the individual policy.
Who needs Professional Indemnity Insurance?
Professional Indemnity Insurance should be considered by businesses and individuals that provide professional advice, designs or specialist services. This can include consultants, accountants, engineers, architects, IT professionals and other professional service providers. In some professions, PI insurance may also be required by legislation, a professional association or a client contract.
How much Professional Indemnity Insurance do I need?
The appropriate level of PI insurance depends on factors such as the nature and value of the services you provide, the potential financial impact of a claim, your contractual obligations and any industry requirements. An experienced PI insurance broker can help assess these factors and recommend an appropriate level of cover.
Does Professional Indemnity Insurance cover previous work?
Professional Indemnity Insurance is generally written on a claims-made basis, meaning the policy in place when a claim is made is typically the policy that responds. Retroactive cover may provide protection for work completed before the current policy commenced, subject to the policy’s retroactive date, terms and conditions. It is important to discuss your previous work and insurance history with your broker when arranging cover.
Is Professional Indemnity Insurance compulsory in Australia?
Professional Indemnity Insurance is not compulsory for every business in Australia, but it may be mandatory for certain regulated professions or required to maintain membership of a professional body. Clients and contracts may also specify a minimum level of PI insurance.
