Professional Indemnity Insurance

Provides cover for costs incurred as a result of negligent or alleged negligent advice given.

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Professional indemnity insurance can be complex. We are here to assist and demystify the process for you.

Mistakes happen, its a fact of life.

It doesn’t matter how experienced you are or how good your intentions were, mistakes still happen. This is why professional indemnity insurance is so important for anyone who receives a fee either directly or indirectly for advice or service.

Professional Indemnity Insurance will protect you should you become legally liable for costs as a result of:

  • Any actual negligent act, error or omission; or
  • Any alleged negligent act, error or omission

To put it simply, professional indemnity insurance will give you protection should you make a mistake without the financial strain of having to defend yourself.

“Chris and his crew, have been extremely helpful in all matters Insurance. Quick to respond to either claims or quote queries, thorough, friendly, and generally all round great service. I would highly recommend them.”
Dave SteadAnasazi Agronomy

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What is the process and how long will it take?

So you have decided that you need Professional Indemnity Insurance.

The next question is always how much cover do I need?

The amount of cover that is usually required can be dictated by the following outside influences:

  • Your association or industry standard,
  • The companies requiring your service, or
  • Government Legislation

If you fall in the above categories it can be easy to set your requirement limit as it is usually done for you.

If you fall outside of these guidelines you will need to consider the following when selecting a limit of cover:

  • The highest potential financial loss that a third party can claim against you, based on the value of the contract you enter in and the loss of future earnings.
  • The policy limit must be sufficient to respond not only to the largest claim but also the total number of claims in a year.
  • Consideration must be given to the cost of legal costs as these can represent a significant portion of any claim.

If you are still unsure of which limit to go for, I am more than happy to have a chat with you to determine your requirements.

“We needed professional indemnity insurance that met quite specific requirements for specialised industry. None of the insurers I spoke to seemed to understand what we needed but the Webber team quickly sourced the right insurance for a cheaper premium than I expected.”
Cameron RussellOutcome Training

How Much Professional Indemnity Cover Do I Need?

With the recent availability of online based professional indemnity insurance, it has become, a lot simpler and quicker for some occupations to get professional indemnity cover put in place. This has assisted the rest of the market in that a majority of quotes can now be turned around in less than 24 hours. Some traditionally difficult occupations such as engineering can take a bit longer.

With most occupations, the process of organising cover is pretty straight forward. Gone are the days of long paper proposal forms to complete. Most forms these days are electronic and short, some as short as one page.

Information used to quote can be obtained in a variety of ways including over the phone, completing a proposal form or using an online enquiry form.

“Great communication and “can do” approach to get me the coverage I need for my business.”
Derek WhitakerBlu Sky Factory

What Should I Look Out for in a Professional Indemnity Insurance policy?

As all insurers vary in their insurance offerings. There are a lot of different things to look out for when selecting a professional indemnity policy that is right for you.

These include:

  • Suitable level of excess including whether it is including or excluding costs
  • Cover for past work if you have not previously had a policy
  • Number of Reinstatement’s of the Sum Insured should you have multiple claims in a year
  • Limits to territory – ie Australia/New Zealand only or worldwide cover
  • A suitable description of the work undertaken
  • The endorsements & exclusions noted within the schedule and policy wording

It is vital to carefully review each policy to determine which one it is suitable for your requirements.

As an Insurance Broker, this forms an integral part of our service, allowing you to be confident that you have received quality advice as to what policy is most suited to your needs, taking into consideration your unique situation.

Webber Insurance Services has always had my best interests at the centre of service delivery; they respond promptly to my inquiries and ensure they listen, so they understand exactly what it is that I’m asking of them. I would have no hesitation recommending Webber Insurance Services to a colleague or friend.
Karen Gilles-ReidEmbodied Grounded Connection

Who Needs Professional Indemnity Insurance?

“We needed professional indemnity insurance that met quite specific requirements for specialised industry. None of the insurers I spoke to seemed to understand what we needed but the Webber team quickly sourced the right insurance for a cheaper premium than I expected.”
Phillip MillerOrgnex

Need More Professional Indemnity Insurance Information?

Check out the Professional Indemnity FAQ’s.

To arrange an obligation-free quote please click the button below – if you would like more information or have any questions, please call us on 1300 932 237.

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Professional Indemnity Insurance FAQ’s

1. Who or what is classified as a professional?

If you hold yourself out as giving advice and/or provide services of a skilful nature you may be regarded as a ‘professional’.

That means persons other than those in ‘traditional’ professions, such as lawyers and accountants, are now considered to be professionals – e.g. engineersinformation technology consultants, graphic designers and financial planners.

2. Why does a professional need a Professional Indemnity (PI) policy?

It is required by law that the professional exercise the required skill to an appropriate level expected by that profession. Professionals are only human and mistakes do happen.

Any financial loss, injury or damage arising from an act, error or omission by the professional to provide the required level of skill may mean that an award is made in favour of a person who suffers a loss, damage or injury.

Of course you may also be required to hold a professional indemnity insurance policy by law, to be a member of a professional association or as a contractual requirement.

3. What protection does a professional indemnity policy provide?

A PI policy safeguards a professionals personal and business assets in the event of a claim, therefore ensuring that he/she or the practice is able to carry on their business.

A PI policy will fund the defence of a claim therefore protecting the cash flow and balance sheet of the professional business.  Professional Indemnity policies vary in cover from insurer to insurer so you need to compare each policy carefully.

4. What is a ‘claims made and notified’ policy? How does it differ from an ‘occurrence policy’?

Professional Indemnity insurance is a ‘claims made and notified’ policy.

This means that is a requirements of the policy that and any fact, situation or circumstance that may result in a claim, be notified to the insurer within the period of insurance.

The actual error (or alleged error) could occur at any time if there is retroactive cover, or otherwise it must occur during the period of insurance.

The insured must not have had any prior knowledge of the fact, situation or circumstance before the period of insurance. In an ‘occurrence’ wording such as Public Liability policies, the circumstance must occur during the period of insurance whilst the notification of this event can occur at any time subsequently.

5. What does a Civil Liability Professional Indemnity wording cover?

It indemnifies the insured for claims arising from any civil award imposed by a civil court, as opposed to criminal liability or penalties enforced by a criminal court.

A Civil Liability Professional Indemnity wording is broader than a ‘negligence wording’, as it will indemnify the insured for claims arising from strict liability where no negligence is involved.

6. Why do I have to fill out a proposal form?

To provide the insurer with the minimum level of information to adequately understand your business. You may also need to provide a corporate brochure, CV or capability statement to support your proposal form.

7. What do costs inclusive’ excess and ‘costs exclusive’ excess mean?

Costs inclusive excess means the insured must pay the amount of the excess towards the legal and defence costs.

Costs exclusive excess means the insured does not pay any excess towards the legal and defence costs, but only pays the amount of the excess towards the settlement of any claim.

A Costs Exclusive Excess is more favourable to the insured but will generally cost more, not all insurers provide a costs exclusive excesses.

8. What is the retroactive date?

Retroactive date is the date after which acts, errors or omissions of the insured are covered.

That is, any act, error or omission arising from work done after the retroactive date will be covered under the policy.

9. What is continuous cover?

Continuity of cover is essentially a loyalty bonus.

It means that if someone who was insured with an insurer in unbroken successive periods notifies the insurer of a claim or circumstance in a subsequent period which should have been notified in an earlier period, then that claim will be covered under the latter policy, but subject to the smaller sum insured of the two applicable policies.

‘Non-disclosure’ issues and ‘known circumstances’ exclusions will not be raised. However, prejudice due to delayed notification may be taken into account in the adjustment of the claim.

10. What is automatic reinstatement?

Unlike other liability policies, the sum insured of the Professional Indemnity policy is limited so that the limit applies to the aggregate of all claims against the policy in the policy period.

The automatic reinstatement allows this aggregate limit to be increased, while the limit for any one claim remains the limit of the sum insured.

For example a policy with $1,000,000 Sum Insured with ONE automatic resentment allows the insured to have 2 claims for $1,000,000 each during the policy period but not one claim for $2,000,000.

11. What is meant by a ‘circumstance’?

The test of what is a ‘claim circumstance’ and whether it ought to be notified is an objective one. That is, would a reasonable person in the position of the insured have realized that the circumstances may give rise to a claim?

When in doubt, notify the insurer especially if the events in question give you cause to be concerned that a claim may arise. In circumstances where you are aware of your negligence, it is no excuse for the late notification of a claim circumstance simply to wait and see if a formal complaint is made.

12. What is the difference between jurisdiction and territorial limits?

These two terms are sometimes confused.

Territorial limit refers to the place where the act, error or omission occurs. Jurisdiction limit refers to the fact that the policy will only cover claims brought within the court system of the nominated countries.

13. Claims examples possibly covered under a Professional Indemnity Policy

  • Negligence arising from a Breach of Professional Duty due to an act, error or omission
  • Fraud and Dishonesty of staff
  • Libel, Slander or Defamation against a third party
  • Loss of client documentation
  • Legal liability for damages and claimants’ costs/expenses arising from the act, error or omission/civil liability of the “Company’s” employees
  • Wrongful or inadequate advice to client(s)
  • Acting without proper instructions from the client
  • Failure to act in accordance with client’s instructions or at all.
  • Failure to advise client
  • Breaches of Trade Practices Act/Fair
  • Trading Legislation- misleading or deceptive
  • Breaches of Statute – eg; Corporations Law, Uniform Consumer Credit Code

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