Professional Indemnity Insurance is designed for people who provide professional advice for a living, including accountants, law and financial advisers, engineers, marketing consultants and medical professionals.
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 where a third party claims an alleged error or omission out of your professional duty.
What can it cover?
As a wide-ranging insurance solution, professional indemnity cover may include anything from accidents to errors and omissions.
Depending on your policy, professional indemnity insurance can cover:
|Type of cover||Potential benefits|
|Civil Liability||Civil liability to a third party arising out of the conduct of their professional business.|
|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.|
|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.|
What usually isn’t covered?
Exclusions, the excess you need to pay and limits of liability can vary greatly depending on your insurer. Policies generally won’t include cover for:
- Contractual or commercial liabilities
- Liabilities which results from fraud and dishonesty
- Unpaid fees
Michael is an engineer who designs the supporting foundations of a residential property. He makes an error with the site calculations – which leads to the slab cracking and damage to the property of the owner. His company is liable for this loss, which could be anywhere between $150,000 up to the full value of the house.
But because Michael has professional indemnity insurance, he’s covered for this amount – as well as any legal expenses if the matter goes to court.