Concern around whether you need professional indemnity insurance is a frequently asked question (FAQ) that insurance brokers get. To help you get a better understanding, we thought we’d prepare a little ‘professional indemnity insurance 101’ and remember we’re always just a call away if you want to talk through your specific situation in more depth.
What is Professional Indemnity Insurance?
First off, what is professional indemnity (PI)? It’s is a type of insurance that protects you and your business against claims for alleged negligence or breach of duty arising from an act, error or omission in the performance of professional services (according to our insurer partner CGU’s definition).
To put that into context what that looks like, imagine you went out on site to visit a client and you overlooked something or accidentally forgot to tell them about a crucial piece of information, this may have led the client to enter into an arrangement or act a certain way they wouldn’t have otherwise because of the advice you administered. This can be true for doctor or a lawyer as well. Here are some case studies of recent professional indemnity cases in Australia that involved a certifier, building inspector and an engineer.
Do I Need Professional Indemnity Insurance?
The majority of white-collar professionals will need PI (some industries this is mandated by law), such as lawyers, accountants, bookkeepers, engineering professionals, IT specialists, psychologists, and so on. It will also depend on the employment contract as well; some businesses cover their employees while others do not. It’s crucial to understand your contract with your employer and if you’re not sure you can get a lawyer to check over your contract.
Is Professional Indemnity Insurance Financially Beneficial?
Yes, imagine having to pay for a lawyer to defend you or your business in one of the cases mentioned above, this is cost that could be in the hundreds of thousands of dollars. With the right professional indemnity insurance solution this will give you some financial peace of mind in the event you get taken to court.
What Does Professional Indemnity Cover Me For?
PI insurance is designed to protect against slip ups at work including, omitting information, revealing information or miscommunication and saying the wrong information accidentally, etc. It’s especially important to have PI when working in a high-risk profession where you are giving out advice on a daily basis and it relates directly to a person’s wellbeing and health for example, a doctor, lawyer or psychologist even an engineer working on big project worth lots of money. The higher the stakes the higher the risk, in a nutshell.
So in conclusion, for those in professional services, we typically view PI as a foundational component of your insurance solution. If you’re not sure whether this applies to your specific situation, just contact us – we would be happy to have a chat and provide a free, no-obligation quotation so you can check that you’ve got a good solution in place at a competitive price.