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Why do I Professional Indemnity Insurance?

 
How do you figure out who needs Professional Indemnity Insurance? 
 
In our experience, many people mistakenly believe that PI insurance only applies to architects, accountants, engineers, lawyers, or doctors. However, that’s simply not true. Furthermore, some people incorrectly believe that because they are only a small business, they don’t require professional indemnity. In fact, if you are set up as a sole trader, contractor, consultant, or freelance professional, you still need to consider professional indemnity insurance.  
 
So, how do you figure out who needs a Professional Indemnity insurance in Australia? 
 
Start by asking yourself these 3 questions: 
 
1.       Is your work skilled? 
2.       Did you require a period of study or formal education or training? 
3.       Are you part of a collective organisation which regulates and sets standards? For example, the Australian Market & Social Research Society that sets the code for professional behaviour 
 
If you answered yes to one or more of these questions, you need Professional Indemnity Insurance. 
 
Why do I need professional indemnity insurance? 
 
Well, Professional indemnity insurance protects your business’ reputation. In fact, it does this, well before a dispute reaches court. In this way, it is providing legal and reputational defence costs. In fact, there are many advantages in having PI insurance. However, in our experience, the three key benefits are listed below. 
 
1.       Access some of Australia’s best legal firm: In the event of a Professional Indemnity claim would you know what legal firm to appoint? Further, did you know that a Professional Indemnity insurer gives you access to some of Australia’s top legal firms? In that way, you can rest easy, knowing that the appointment of a lawyer to defend you is all handled by the insurer. You see, Insurance companies have a panel of legal firms. 
 
They are selected for their expertise in handling professional indemnity claims. In fact, we regularly see claims where the legal costs are just as much as the amount of compensation being claimed. 
 
That’s why it is important to check your PI insurance. It’s so you can make sure the legal costs are in addition to the limit of indemnity. Often, because these legal firms specialise in PI insurance claims, they may be able to resolve the matter quicker that what otherwise could be achieved. 
 
However, without insurance you may not be able to afford these specialist firms. That’s why it is important to have professional indemnity insurance. 
 
2.       Restore your reputation: Some professional indemnity insurance policies extend to include cover for Public Relations Expenses. This is to restore your reputation. In particular, coverage for Public Relations Expenses is important. This is because it covers costs for a public relations firm. They are engaged to limit adverse effects or negative publicity from a claim. Better still, many Professional Indemnity insurers have a generous Public Relation Expenses limit of $50,000. 
3.       Focus on running your business: A claim against you for alleged unprofessional advice, failure to exercise required skill, or breach of professional duty, can be costly. That said, it’s not just the financial cost you need to consider. It’s the time, stress and administration required for a lengthy court case. 
 
If you go through the court process without the support of an insurer and their lawyers, it will severely impact your business operations. PI insurance can help ensure that your business keeps operating, whilst the insurers and their lawyers manage the claim. More importantly, it can give you the freedom to get on with what you do best. Allowing you to focus on the day to day activities of running your business. 
 
4.       The risks of not having PI insurance can be significant: In short, if you provide any service that is relied upon by other people or businesses, you may need professional indemnity insurance to protect you. In fact, not having Professional Indemnity Insurance often represents a very serious business risk. 
 
So, if you are confused about who needs Professional Indemnity Insurance and your occupation appears on the list above, get a free online professional indemnity quote. To do so, just visit our free online insurance quoting tool for a free, instant, no-obligation online quote. 
 
In summary, when considering why you need pi insurance, don’t just think about what someone may claim if you allegedly made a mistake. Think about the time, energy, and effort it takes to defend a claim, even if it is unfounded. 
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.


FD Beck Insurance Brokers, ABN 68 004 455 038, AFSL 233784

This article originally appeared on Why do I Professional Indemnity Insurance? and has been published here with permission.

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