The professional indemnity insurance cost depends on your profession and how big of a risk there is that you could incur a claim from a third party. Claims of this nature are based on negligence by or an error that you or a staff member may have made that has caused damage or financial loss to the claimant.
How Are Professional Indemnity Insurance Rates Determined?
The professional indemnity insurance cost or rates is determined based on various factors, as well as the choices that you make with regards to the policy, such as what limits of coverage you select.
Factors that will affect the premiums include:
- Your particular profession
- The likelihood of a claim being brought against you or your business
- The potential severity of the claim
- How many years you have practised your profession
- Annual revenues
- The amount of professionals covered by the policy
- The location of the business
- The claims history
It is important that you take all of the above into consideration when considering the amount of cover that is pertinent for your business.
Examples of Professional Indemnity Insurance Cost
It is also important to remember that professional indemnity insurance costs do vary from state to state as a result of differing stamp duty rates. The limits for minimum and maximum cover also differ from state to state. The higher the cover, the higher the cost of the indemnity insurance will be.
Here are some examples of costs to various professionals to give you a broad idea of what you may have to pay.
- IT Consultant
An IT Consultant with a turnover in the range of $220,000 per annum can expect to pay somewhere between $648 and $671 inclusive for $1M Professional Indemnity.
Professional indemnity insurance costs differ depending on turnover and the number of professionals covered by the policy. The minimum costs for an accountant generally begin at around $752 inclusive, for coverage of $1M
Once again, the costs are determined by staff and turnover; the minimum amount a bookkeeper can expect to pay for PI cover of $250k is in the region of $272 inclusive.
- Management Consultants
The minimum premium that a management consultant can expect to pay for $1M professional indemnity cover would be around $776 inclusive.
The above amounts are merely for demonstration purposes and to give you an idea of your professional indemnity insurance cost could be. Remember, though, it is not always the best idea to take out the minimum cover.