The Importance of Professional Indemnity Insurance
Along with being human comes human error; if you or your business provide professional advice or services, there is always a risk that your services could inadvertently detrimentally impact your customers.
Professional Indemnity (PI) Insurance helps manage risk associated with claims against you for alleged errors or negligence committed under your capacity as a professional service provider.
Professional Indemnity Insurance: What does it cover?
Even if you deliver your professional services perfectly, there’s still the possibility you could end up with a claim made against you down the track. For example, if your client suffers a loss from your services purely because they misunderstood your advice, there’s always a chance you’ll win in a lawsuit — but who is going to foot the bill for your legal expenses? This is where PI comes in.
Professional Indemnity Insurance covers expenses and damages payable relating to:
- Client losses due to misinterpretation of or incorrect advice.
- An accidental mistake made by yourself or your business representatives. For example, reporting an incorrect figure, forgetting to lodge a document, or losing important records.
- Confidentiality breaches and defamation. Such as accidentally giving away sensitive information relating to your client.
- Breaching intellectual property rights. Like if you were to unintentionally allow your client use of images belonging to someone else.
- Rebuilding your brand reputation. If your business has received some bad coverage in light of the claim against you, PI can cover the costs of public relations services to rebuild your reputation.
- Court attendance costs/legal expenses. Costs incurred while investigating and defending claims made against you, as well as damages paid.
It’s important to note that PI Insurance does not cover circumstances including:
- Intentional wrong-doings.
- Injury or property damage outside of the scope of your professional services. For example, a client injuring themselves on your premises (this is where Public Liability Insurance steps in).
- Existing claims or situations expected to result in a lawsuit that you know about before the policy commences
Who is this Insurance relevant to?
Simply put, PI is designed for anyone offering a professional service, consultation or advice for a fee. While PI is compulsory for some occupations, many other professionals can choose whether they’d like to use insurance to assist in managing the risks associated with their services.
Some of the occupations that may benefit from adequate Professional Indemnity cover include:
- Finance Professionals. Including Finance Brokers, Accountants, Bookkeepers, Taxation Professionals, Financial Advisers.
- Construction and Property. Such as Building Inspectors, Engineers, Real Estate Agents, Architects, Property Developers.
- Allied Health Professionals. Including Pharmacists, Physiotherapists, Nurses, Psychologists, Paramedics, Dieticians.
- Business Professionals. Like Management, Marketing or HR Consultants, IT Professionals.
What you risk without PI
Without sounding dramatic, forgoing PI Insurance can see you risk your reputation, financial security, business and livelihood.
When weighing up the costs of Professional Indemnity, ask yourself if you can afford to not have it. As mentioned, even if you’ve done your job perfectly, the misinterpretation of your advice could see you having to dish out thousands of dollars defending yourself, settling claims or repairing your reputation.
Professional Indemnity cover is an effective way of ensuring you can afford to protect yourself from claims made against you.
Review your insurance
If you provide professional advice or services, it’s a good idea to assess whether you have adequate cover — failure to do so could have devastating consequences on your business and livelihood.
Talk to us about your risk profile and review your insurance needs with the support of professional advice and recommendations. Taking action today could prove invaluable in the future.