As a consultant, licenced professional or service provider, a significant part of your job involves solving problems for clients.But what happens when your work causes the problem? Mistakes happen. In every industry, in every state, despite everyone’s best efforts and intentions, not everything goes as intended.In an increasingly litigious society, it’s important to be covered from the financial fallout if your work or an employee’s actions causes a loss for one of your clients.If a burned client pursues legal action, your business is on the hook for high legal costs in the best-case scenario.This is where professional indemnity insurance protects Perth businesses. Our affordable professional indemnity insurance has prevented a company from risking it all due to an alleged or proven mistake on more than one occasion.
What is professional indemnity insurance?
Professional indemnity insurance covers the insured business for claims brought against the company for financial losses, injury or damage arising from a breach of professional duty.As well as recovering direct costs, professional indemnity insurance covers associated incursions like legal and PR costs.In simple terms, if a third party (e.g. a client) alleges that you or your employee provided work or advice that triggered a loss, professional indemnity insurance is there to help you manage the costs.
Do I need professional indemnity insurance in Perth? What about nationwide?
Some professions require professional indemnity insurance in Perth:
- Medical practitioners (doctors, dentists and surgeons)
- Tax agents
- Financial advisors
- Real estate agents
Outside of these mandatory cases, there is no statutory requirement to carry professional indemnity insurance in Australia. Requirements vary state-by-state, so you will need to consult your insurance advisor for information relevant to your business.It is also not uncommon for peak professional bodies to include professional indemnity insurance as a membership condition. Similarly, some professional associations, clients or collective organisations require businesses to carry professional indemnity insurance.
What kind of claims does professional indemnity insurance cover?
Every policy is unique to the company, industry and specific risk profile. In general, however, professional indemnity insurance will cover claims arising from:
- Contract breaches
- Breach of duty
- Damages for dishonest or negligent behaviour
- Loss of documents
- Consumer law breaches
Given the breadth of possible cases where a company is exposed to risk, carrying business indemnity insurance is more than a wise choice. It’s essential.Especially if your business:
- Provides advice to clients
- Creates designs, drawings, drafts or schemes
- Offers teaching and training
In these cases, your work exposes the business to risk every day. Professional indemnity insurance is an affordable safety net to give you peace of mind and financial protection.
What does professional indemnity insurance cover?
Connect Business Insurance can tailor a professional indemnity insurance policy to meet your needs depending on your requirements and risk profile.Here are some of the inclusions you might find in your policy.
Fidelity insurance reimburses the insured business for losses directly caused by dishonest employees. This might include the costs of theft, embezzlement, forgery or other fraudulent acts.
Not all mistakes lead to criminal charges. If the misdeed or contract breach is not of a criminal nature, civil liability insurance covers the damages and legal obligations.In broad terms, civil liability insurance covers allegations of misleading or deceptive conduct on the part of the insured company.
In some cases, allegations related to professional indemnity cases can trigger an investigation by regulatory or government bodies. Defending your position during these lengthy investigations incurs a high financial cost.Enquiry cover in a professional indemnity insurance policy is designed to recover these costs.
If a claim progresses to the Courts, defence insurance recovers the legal costs of mounting a defence. Depending on your policy, defence costs may include settlement and compensation costs.This can also stretch to reputation management and public relations costs if they directly relate to defending a business against an indemnity claim.
Advancement of costs and expenses
The cost of defending a claim can add up from unexpected places. Ask your policy provider whether your professional indemnity insurance policy includes contingencies for extra costs and expenses incurred as part of defending the claim.
What isn’t covered by professional indemnity insurance?
Professional indemnity policies commonly exclude some expenses:
- Costs incurred due to fraud committed by the insured
- Commercial and contractual liabilities
- Interactions with the public (this is public liability insurance)
- Acts deemed deliberate, intentional or excessively negligent
- Unpaid fees
- Pollution and asbestos
Many of these costs overlap with other insurance types like public liability insurance, worker’s compensation, construction insurance and management liability insurance.The best way to ensure your business is covered on all fronts is to speak with an insurance expert at Connect Business Insurance.
How much does professional indemnity insurance cost in Perth?
As you might expect, professional indemnity insurance premiums vary widely depending on the policy specifics.Some of the factors that can impact your premium include:
- The type of work you do
- Business size and complexity
- Annual turnover
- Claim history (yours and your employees’)
- Level of cover required
We encourage you to shop around for quotes on professional indemnity insurance in Perth. However, always read the PDS and policy fine print to ensure your provider is on your side like Connect Business Insurance.We can also bundle professional indemnity cover into a tailored insurance policy, giving your business complete protection and peace of mind.
The costs of not carrying cover
Working without professional indemnity insurance is a risk in almost any industry. So let’s look at a few examples to illustrate what can happen when things go wrong, despite the business’ best intentions.
- An architect fails to clarify instructions to build a retaining wall correctly. As a result, the client must pay for the wall to be excavated and moved, so they pursue legal action to recover their costs.
- A video editor uses a song under copyright in the soundtrack. The track’s publisher sues the client, resulting in legal proceedings.
- An accountant incorrectly audits a client’s accounts, resulting in a penalty from the ATO and action from shareholders.
Professional indemnity insurance could protect the insured business against the ensuing financial fallout in all these cases.
Get a quote for affordable professional indemnity insurance
Connect Business Insurance is Perth’s expert on professional indemnity insurance. Our affordable policies are tailored to your requirements, including organising nationwide cover and bundling insurances for comprehensive cover.Call us on 1300 20477 20662 or request a quote online for fast, affordable professional indemnity cover.