Professional indemnity insurance is created to provide financial protection for professionals who give expert advice and service as a part of their job. As a business owner, you might need to consider obtaining professional indemnity insurance to protect yourself and your assets in case of a claim against you. If you are found liable for the financial loss of a third party followed by your professional advice or negligence, you will need to cover the cost of legal defence and damages.
Professional indemnity insurance is an important cover for your business; therefore, it is good to equip yourself with the right information before getting an insurance package for your business.
1. What does professional indemnity insurance cover legally?
When there is a claim against you, most of the time, you will need to hire a lawyer who will act on your behalf during legal proceedings. Luckily, professional indemnity insurance will cover legal costs. It will also cover costs related to an investigation of a potential indemnity claim and public relations costs that may follow an indemnity claim against you. It means that if your reputation gets tainted due to the claim and you need to hire a public relations, professional indemnity insurance will cover those costs. You will also be covered if you need to pay for damages after a settlement of an indemnity claim.
2. Do you need professional indemnity insurance?
Tradespeople might think that professional indemnity insurance doesn’t apply to them, but it is a good idea to consider getting it if you provide professional advice to your clients. If advising clients on various matters isn’t a part of your daily job, take a look at errors and omissions insurance. It’s a form of professional indemnity insurance that provides cover for individuals who don’t typically give professional advice but may still incidentally provide advice that exposes them to an indemnity claim.
3. Why is professional indemnity insurance important?
Even if your work is more hands-on, you may still be vulnerable to indemnity claims in a situation where you give incidental professional advice that leads to an injury or damage of a property of a client. Therefore, you may go through a very time consuming and costly process of an indemnity claim, but if you are covered with professional indemnity insurance-related costs to the claim will be covered according to your policy.
4. What level of professional indemnity insurance do I need?
Level of cover you require will depend on various factors, including the type of work you do and what risks your business is exposed to. Some companies and clients may require you to have a certain level of cover to be able to get a contract with them.
5. What are the risks for your business?
As mentioned above, to understand the level of cover you require, you need to consider what risks your business faces. The higher the risks, the higher level of cover you will need to get.
6. Is professional indemnity insurance enough?
After you consider all the possible scenarios and risk areas within your business, you may find that professional indemnity insurance by itself will not cover you in some instances. If you are unsure whether professional indemnity insurance is enough, you can speak to an insurance broker, and they can help you choose the right insurance package for your business.
7. What are the terms and conditions of the policy?
Insurance policies may vary depending on which insurer you choose, so it’s essential to check the terms and conditions of the policy before you purchase it. There may be some exclusions that refer to specific acts, people, types of damages and locations to which your policy won’t apply, therefore you won’t be able to make a claim. There can also be extensions that provide cover for losses outside of normal conditions of the policy. Extensions usually come at an additional cost but may be vital to ensure full protection of your business.
8. What is the cost of professional indemnity insurance?
Professional indemnity insurance cost can vary depending on the following factors:
- Type of work your business offers
- The size of your business
- If you have any employees
- The number of employees you have
- Your annual turnover
- Your history of insurance claims
- The level of cover you require
The cost of your professional indemnity insurance will also depend on the specific policy you obtain and how high the risk of an indemnity claim your business comes across.
9. How to find the right insurance broker?
When choosing your insurance broker, see if they have expertise in your trade so they can direct you towards the right insurance package. It is also important to know what insurance marketplace they are partnered up with so you can feel confident that your business is fully protected.
10. How to get a quote?
Insurance brokers are dedicated to providing you with the right information about insurance you require and help you find the right cover for your business.
Working in the field of Insurance for the past 5-6 years. Started consultation on providing Insurance tips and generating awareness of Tradies Insurance in Australia. Public Liability and Professional Indemnity Insurance tips to traders and self employed people.