What Professional Indemnity covers?
What professional indemnity covers?
The past decade has seen big changes in the litigation world. Not only are the numbers of cases against SMEs continuing to increase fairly rapidly, but settlement times are also being stretched, often taking up to five years for a resolution to be reached. Added to Australia's changing litigation landscape is the additional complexity that comes with occupations that didn't exist a decade ago (web designers and developers, social media specialists, app developers, data miners, and so on). As you can imagine, any business that provides a paid service to the public is fair game for litigation, which is why now, more than ever, SMEs need the protection of Professional Indemnity Insurance. Whilst this type of insurance policy is only one of a suite of policies SMEs need to reduce their overall risks, it is no less important to their ongoing success.
What types of litigation are covered by Professional Indemnity Insurance?
Essentially, Professional Indemnity Insurance covers against claims of alleged or actual negligence occurring during the performance of a professional duty. Generally, these claims focus around giving people incorrect advice or the client misinterpreting the advice given to them. It can also include instances when an unintentional mistake has been made, whether that's overlooking a critical piece of information or misinterpreting a fact. These alleged acts of wrongdoing feed litigation, because as a professional, you should not make mistakes that result in a loss to your client. As mentioned above, the number of occupations that can benefit from Professional Indemnity Insurance continues to increase, because the number of services people demand have increased. Professional Indemnity Insurance has always been essential to lawyers, accountants, builders and real estate agents for example, but now landscapers, wedding planners, life coaches, cloud engineers and digital specialists have also been embraced by the world of litigation. The only way to reduce these litigation risks is to either never make any mistakes or to invest in Professional Indemnity Insurance. All it takes is one unintentional mistake to create an unhappy client who talks to a lawyer and a claim against you begins. The result can be a long drawn out litigation process that damages your company's reputation and results in not only settlement costs, but also court costs and lawyer's fees that can easily devastate your business. Professional Indemnity Insurance is designed to reduce these costs and help you to weather the litigation storm.
What costs are covered by Professional Indemnity Insurance?
This type of insurance cover is essential for SMEs in the service industry. Costs covered by this insurance policy include, but are not limited to, the following:
- Damages and court costs awarded to the litigator and against your company
- Costs of investigating the alleged claims
- Defence and legal costs of defending against these claims
Without a doubt, the increasing complexity of the litigation landscape in Australia means that any SME operating within the service industry require Professional Indemnity Insurance. If you are not sure what cover you need in your line of work, talk to an insurance specialist today. 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 suitable 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.
Advisr does not provide advice and does not hold a financial service license (AFSL). All information above has been provided by Lisa Carter.