So somebody has told you that as a professional you need to have Professional Indemnity Insurance (PI), but what exactly does that mean and why do you need it?

Professional Indemnity is insurance cover that all professionals such as architects, accountants, bookkeepers, contractors, consultants, designers, estate agents, engineers, IT professionals and those in the medical field, in amongst others should carry. Some professions in Australia are mandated by law to carry PI.

Even if your profession does not fall under those legally obliged to carry PI cover, it is a good idea to ensure that you are covered if you supply advice or services to customers or clients. Professional Indemnity covers you or your staff in the event that a third party should decide to sue for injury, damages or loss caused as a result of an error or due to perceived negligence on your part.

What Claims Will Professional Indemnity Insurance Cover?

The following will be covered by your Professional Indemnity policy should a claim be brought against you by a third party:

  • Negligence, Error or Omission: This type of claim could be instituted against you if a client alleges that you did not provide them with certain information or inform them about circumstances that subsequently led to them suffer damages to their property, business, or reputation.
  • Breach of Confidentiality: If, for instance, you either accidently or purposefully disclose confidential information about a client to a third party, or an e-mail containing confidential client information is sent to a third party in error, you could be sued for breach of confidentiality.
  • Infringement of Intellectual Property Rights: A designer who uses brand names, exact wording or package designs that are generally associated with particular product or service without permission of the original owner could have a claim of this nature made against them.
  • Loss of Documents: No matter how careful you are, anything could happen that causes the loss of documents belonging to a client. Such a loss by an accountant, for instance, could hold dire consequences for the client and this could lead to a claim of negligence being instituted against you.
  • Omission: An estate agent that omits to tell a buyer that there is a problem which then causes structural or physical damages could be sued by the client.

Anyone can make a mistake, no matter how professional you are; make sure that it does not cost you your business by ensuring that you have the applicable Professional Indemnity Insurance for your business.