Have you ever considered what might happen to your business if you provided services or advice to a client that ended up with them making a claim against you?
What if you accidentally gave them the wrong tip, the wrong treatment, if you forgot to tell them an important aspect of their financial planning, forgot to list extra costs involved in your business transaction…? What if they made a claim against the business for hundreds of thousands of dollars?
We all make mistakes, it’s human nature. And it’s not just in our personal lives, sometimes it’s in business, too. While in most cases it’s something simple like forgetting to reorder printer paper, sometimes it’s a mistake that can directly affect one of our clients. For some, it may be a simple case of giving free services in restitution. Sometimes, though, with a big enough mistake, a single court case is enough to bankrupt a company.
Professional indemnity insurance is one of the most complex areas of business insurance and you have to make sure that you get it right. The wrong level of cover can leave you exposed and your business at risk.
What does professional indemnity insurance cover?
This important business insurance covers you for those cases when mistakes resulting from negligence, omissions, and errors arise – cases where you’ve breached your professional duty that result in your client’s injury or loss. Those accidental mistakes that we sometimes make in business that can end up being really costly if we’re not insured properly.
While these aren’t criminal complaints, there still may be civil lawsuits brought against you or your company.
Professional indemnity insurance will protect against claims arising from:
- Breaches of confidentiality
- Breaches of duty
- Defamation and/or libel or slander
- Breaches of various Australian laws including the consumer, fair trade, trade practice, and competition acts
- Loss or damage of important documents
- Actions of dishonest employees
- Copyright and/or intellectual property infringement, if accidental
Ask us for more info about what’s included and what’s not – each package will be uniquely tailored to your business situation.
Who needs professional indemnity insurance?
It is highly recommended to have professional indemnity insurance if you are involved in any professional services position, or own a professional services company. Here are some examples of professions that require this type of cover:
- Business consultants
- Recruitment consultants
- Financial advisors
- OHS professionals
- Builders and construction professionals
- Project managers
- Environmental consultants
- IT firms and professionals
- Advertising or PR firms
- Real estate agents and agencies
- Fitness professionals
For each profession, the level of cover may be tweaked to ensure that you are protected in instances that crop up often within your industry.
What costs will professional indemnity insurance cover?
This form of professional insurance will cover all or part of the costs of:
- Your legal defence
- Your client’s defence
- Court ruling amounts against you
For most claims, they are settled by the insurance company before they even get to court, so long as they don’t seem spurious in nature.
The DGA advantage
At DGA insurance brokers, we have many years of experience in determining the ideal professional indemnity insurance policy for yourself as a contractor or employee, as a sole operator, or as an owner of a business practice. With each different profession comes a different level of required cover, and we can navigate which policies are the best for your given case.
Don’t be left out where it really counts. We’re all bound to make mistakes, even in business. With professional indemnity insurance cover, you can be assured that even when you make the occasional mistake, you won’t be at risk of haemorrhaging thousands of dollars when you have to turn up to court.
Choose DGA to navigate your path through your professional indemnity insurance package, and ease your mind that you’re in good hands – protecting yourself, your reputation, and your business. Call us on (03) 8636 9000 to find out more.
Is products liability covered?
Some policies may also include products liability, which extends coverage to any products that are produced or sold by your business. If it’s not included in your package, we can discuss adding this as an optional extra if it suits your business case.
Should I let my insurance provider know of any potential claims that might arise?
The answer to this is an overwhelming yes. Deliberately withholding information from your insurance provider about potential claims that may arise can potential be seen as a breach of your policy. Simply picking up the phone and having a chat to us about the situation is all you need to do on your part. We’ll ask questions about the event and decide whether it is necessary to pass the information along to your insurance company or not. This makes the whole process a lot less stressful on your part – it’s our job to be the middle man!
What are some examples of professional indemnity claims?
Let’s consider the following case: A professional accountant gives you advice that you can make a claim for your suits as a tax deduction for your work. This is definitely not the case, and so the ATO gives you a fine for making a false claim. Because you were advised by a tax professional, you might the make a claim against the accountant for wrong advice, that will cover the costs of the fine, etc. If the accountant has professional indemnity insurance, it will cover the court fees and the liability, should the ruling be in favour of the prosecution.
You are an architect employed by a car manufacturer to design their new salesroom. On the second floor of the building they plan to showcase some of their cars and so need to have a mechanism to get them to the second story. Unfortunately, you make an error in your calculations, and so only half the cars are wide enough to fit into the space to transport them to the third floor. The car manufacturer makes a claim against you for not designing their showroom to specifications.