Professional Indemnity Insurance in Australia: Be Safe Down Under

One who is a skilful in his field of experience and knowledge, who is popularly considered an expert, is a professional. He expends advice and services for a fee by virtue of this expertise. And when he makes a mistake, for whatever reason, he usually is held responsible and is made to pay for the consequences of his mistake. Professional Indemnity Insurance has been conceptualized keeping such individuals in mind. Earlier a professional would mean a doctor or a lawyer or even a chartered accountant. But now the purview is widening. Academicians, Career counselors, Architects….all come under the scanner if their advice is considered suspect. It is because of this expectation of a certain level of skill and expertise, of the placement of client trust...  that the bar is raised, and when professionals err as in   human error, there is very little scope for overlooking. The mistake while not being intentional can become a glaring instance of oversight or omission, one that might have grave financial fallout. Insurance companies and professionals have realized that society is becoming increasingly litigious and that legal recourse to redress of grievances is no longer just a probability, it is an option. In countries like Australia with the Trade Practices act of 1974, the rights of the consumer are comprehensively protected. There is a Governmental body that has been set up, the Australian Competition & Consumer Commission that is a watchdog protecting consumer rights. This means that even if the individual backs down the state can prosecute under section part VC, simply to enhance the customer welfare.

Instead of walking on eggshells, a professional needs a comprehensive safeguard to protect his livelihood from disgruntled customers and clients. One needs to also remember that each professional has several supportive staff, thus there is a ripple effect if the professional is sued for negligence or breach of trust. The income of several will be threatened at one go. A professional Indemnity Insurance policy umbrella can cover several danger areas simultaneously. Breach of duty, misleading conduct, fraudulent or dishonest acts, acts of omission, unintentional defamation…all these heads can be covered. Each policy is customized to client requirements depending on the type of profession and the years of experience garnered. Every policy is different covering different aspects and those looking for professional indemnity insurance need to compare quotes and policy breadths before making an educated decision.

A professional seeking coverage can often get confused by several insurance -specific terms thrown at him. He needs handholding if required and to be walked through the entire process of choosing a policy that best suits his requirements. Terms like 'retroactive date' i.e., the date after which the errors are covered, or 'inception date' i.e. the date of commencement of a policy, need to be explained. He needs to understand when if at all he becomes eligible for 'continuous cover' which is like a loyalty bonus.  He needs to know about 'cost inclusive excess' which includes legal defense fees and compare it with the benefits of 'cost exclusive excess' that does not stretch to legal defense costs. Premiums are high and need to be stretched to cover as much as possible for as long as possible. For all his professional indemnity insurance concerns he needs guidance and an insurance agent does just that. Policies and premiums are explained, comparative quotes are taken and a policy is subscribed to with both the insurance company and the professional benefiting. It's an all round winner situation and it is the insurance agency that puts all the pieces together.

Additional articles about professional indemnity insurance

About the author

Robert Ellis is a freelance insurance advisor who provides suggestions to clients on various aspects of life and business insurance cover. He is associated with Bizcover.com.au and provides guidelines on accounting insurance, professional indemnity insurance, IT insurance, business and office insurance and more.

Please Rate This Article

Select Rating Excellent Very Good Interesting Fair Could Use Improvement

Number of ratings: 0
Rating: 0