If you are a professional who provides services or advice to others, then it’s quite likely that you will need Professional Indemnity Insurance. This type of insurance reduces your exposure to the costs of legal action taken against you by your clients (and any associated financial losses) for an act of negligence that occurred during the commission of your professional duty.
Why do you need Professional Indemnity Insurance?
The costs that can be covered under this type of insurance include your legal bills, compensation to third parties, costs for claims investigations, court attendances and public relations. The costs of defending a claim of negligence can be extremely high and without adequate Professional Indemnity Insurance, many small businesses may struggle to pay all these costs.
In fact, many small businesses underestimate the actual costs that are involved in cases of negligence, believing that it won’t happen to them, so why bother with the additional costs for this type of cover? Unfortunately, over the past few years we have seen a significant growth in employment litigation in Australia and there is no reason to believe that third party litigation will not continue to increase across the board.
It’s important to note that a litigation case can last for several years before it is finalised, resulting in mounting legal costs that can run into hundreds of thousands of dollars with an associated impact on your reputation, even if the claim is eventually found to be unsupported.
Who can benefit from Professional Indemnity Insurance?
All professionals can benefit from taking out Professional Indemnity Insurance, because if the advice or service you provide is incorrect and results in a loss to your client, they can sue you for negligence. Lawyers, accountants, engineers, advertisers, building surveyors, driving school instructors, graphic designers, landscape designers, private investigators, life coaches, wedding planners and real estate agents are just some of the professionals that can benefit from this type of insurance.
Consider your risks
If you currently don’t have Professional Indemnity Insurance, it’s a good idea to make a list of the areas in your business where you are most exposed to claims of negligence. You will need a policy that matches your level of exposure and potential risks so its imperative to match the right coverage with your identified exposures, not just rely on the cheapest policy.
All policies will have specific exclusions, so you will need to read the fine print to decide which policy is best for your level of risk. One of the best solutions is to locate an adviser who can customise a policy and tailor it to your specific requirements, giving you peace of mind knowing that there will be no surprises if a claim is made against your business in the future.
To explore Professional Indemnity Insurance for your business, talk to one of our insurance specialists today.
General Advice Warning
The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.