Professional Indemnity

In an increasingly litigious environment, many Australian professionals consider Professional Indemnity insurance as important as public liability or theft insurance policies.
If you are a professional providing advice as part of your ongoing business, you may want to consider Professional Indemnity insurance as a method of protecting, not only your business, but your personal assets.

What is Professional Indemnity Insurance?

Even professionals make mistakes.
Professional Indemnity protects against the financial loss of those mistakes, for both you and the third party, if the loss is proven to have arisen from your failure to act appropriately as a professional.

Who is a Professional

A ‘professional’ is any individual who gives advice to others in a manner which suggests them to be a subject matter expert. Excluding doctors and lawyers this definition now can include professions as diverse as consultants, advisors, fund managers, land conveyancers and accountants.

Where do I get Professional Indemnity Insurance

The majority of large insurance companies offer Professional Indemnity insurance, however application requirements will differ from company to company.
If you work in a recognised profession, such as Accounting, many insurers have standard forms that you need to complete. Be aware that these forms are lengthy and ask for a raft of sensitive information about your business. Underwriters from the insurance companies need to know this information in order to determine the level of cover they are willing to provide to you.
If you work in a less conventional profession, insurers may be more reticent to offer you a policy. In this instance, contact your industry’s professional body or your local chamber of commerce who may have links with insurance companies and can assist in you.

What are the secrets of success in picking a policy?

Every situation is different, but here are some hints and tips for picking the best Professional Indemnity policy for you.

• Use a reputable insurer. Remember, this is your livelihood you are protecting. Insurance is one industry where you’ll get what you pay for;
• Is the insurer a specialist in your industry? Often, it may be advisable to select an insurer who has an intimate knowledge of the mechanics of your industry as they are best placed to advise on your potential risks / liabilities.
• Be honest in your application forms. Insurers say that, in paying claims, one of the biggest stumbling blocks is an applicant’s dishonesty in either understating or overstating their circumstances.
• Speak to your industry’s professional groups and/or local chamber of commerce. Often, these groups will already have links and contacts with insurance companies and may be able to procure for you a better deal.
• Consider the use of an insurance broker. Brokers can take the legwork out of the finding the best policy for you and will do all the paperwork, giving you time to concentrate on your business. If you do choose a broker, may sure either they or their employer hold an Australian Financial Services licence.