In today’s ‘compensation culture’ the threat of claims and litigation is increasingly prevalent. If you provide advice or service as part of your work, it’s important that you are protected against claims of performance misconduct or malpractice.
What is Professional Indemnity Insurance?
Professional Indemnity Insurance is designed to protect professionals against legal costs and claims for damages to third parties, which may arise out of an act, omission or breach of professional duty in the course of their business.
Professional Indemnity Insurance can protect your company against unexpected legal claims, with minimum losses.
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The Importance of Professional Indemnity Insurance
Easy access to ‘no win no fee’ legal services which help individuals claim compensation have increased the likelihood of a business experiencing a claim in this area. Professional Indemnity Insurance is necessary for covering not only your own actions but also those of your employees who may unintentionally provide inaccurate or incomplete advice.
Claims of damages can be a huge financial burden on your business, even if you’re not found to be at fault. Professional Indemnity Insurance safeguards your business by absorbing the costs associated with legal defence and any resulting compensation pay-outs.
What Risks May a Professional Indemnity Policy Cover?
Business owners who provide specialist advice are particularly susceptible to a claim from an unsatisfied customer. Whether you run a top city accountant firm or a local hairdresser, if the professional advice that you have given has unintended consequences for your client, you could be held liable.
Depending on your circumstances, the type of risks you are exposed to will vary, but any business that provides specialist advice or services to their client should consider their Professional Indemnity risk, for example:
- A web designer uses unlicensed images on a client’s website which results in the client being sued by the image owners. The web designer may be liable to cover their client’s defence costs and compensation payout to the image owners.
- A bookkeeper incorrectly advises a client that an expense is tax deductible. When the ATO investigates the matter, they fine the tax payer. The tax accountant may be held liable for this mistake and the ensuing costs.
- An IT Consultant designs a software package for a company which doesn’t work correctly, resulting in loss of business and additional costs incurred by the company. The consultant may be held liable to for damages to his client.
As a business owner, the continuing success of your business is dependant upon your ability to manage, mitigate and transfer risks. It is possible to reduce the risk that you are exposed to by evaluating and taking steps to minimise them, however risk cannot be totally eliminated. It is therefore imperative to back up your prevention strategies with a comprehensive insurance policy that can fully protect your business, employees and the general public.
What Are the Key Things That May Be Covered By 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 a client
- Breaches of Trade Practices Act/Fair Trading Legislation- misleading or deceptive
- Breaches of Statute: Corporations Law, Uniform Consumer Credit Code
Who Needs Professional Indemnity Insurance?
In professional industries such as medicine, law, finance, engineering, IT, bookkeeping, real estate and personal training, advice given by professionals can have serious consequences if it’s not 100% accurate. This can lead to a costly litigation process and damages pay out, with repercussion to the business that is often irreparable.
Due to the unpredictable nature of these events, the possibility of completely eradicating this type of risks is relatively low. You can however insure against it.
How PSC Direct works for you
As specialist small business insurance brokers, PSC Direct uses our considerable experience to provide multiple quotes for you. Combining our expertise insuring thousands of other similar businesses with our detailed database of insurers and insurance products; we’re best placed to advise you on the right insurance for your business.
We have strong relationships with the leading underwriting agencies and insurance companies. We can source the most appropriate business insurance policy for you, covering you for what you really need, at the right price.
We can help sole practitioners, small, medium and large businesses protect the businesses you are growing and ensure your assets are covered in the event that disaster strikes.
With our strong relationships to a broad range of highly-rated insurers we are able to advise you on business insurance, professional indemnity insurance, and professional indemnity insurance specifically tailored to meet the risk exposure of your business.
We can also provide advice on a range of additional insurance policies and cover that can affect your business and make sure you have the right insurance at the right price.
72% of Australian businesses fail after experiencing a major loss.
The right business insurance will ensure you are not one of them.
While good insurance covers you for most things – Professional Indemnity, Professional Liability and Property, great insurance covers you for the specific risks that your business faces. We understand that every business is unique and you need a policy that addresses the specifics. We make sure that when you have a claim that’s out of the ordinary and complicated, you’re covered.