How Professional Indemnity Insurance Works In Australia
Get to know how professional indemnity insurance works in Australia. Read on to take full advantage of your PI policy cover.
You can count on the cover of your professional indemnity insurance when dealing with claims arising from allegations of incorrect professional advice or errors in your services. Whenever dissatisfied clients make liability claims, your PI insurance has your back.
In the following sections, we will tackle how this type of insurance works in Australia and how you can take advantage of its cover.
Steps/General Overview on How PI Insurance Work in Australia
The protection of your PI insurance is invoked once you've received a letter of demand (LOD) seeking compensation for damages and threatening lawsuit if the claim is not addressed.
regardless of how preposterous or baseless the claim is, don't ignore it and take the following steps:
Notify your insurance broker. Do this as soon as you receive an LOD, but not long after the claim escalates to a lawsuit to avoid hefty legal costs.
Let your insurer do the work for you. Once you have notified your broker, your insurer will work on the case on your behalf, settling claims before they escalate into lawsuits.
If the claim goes to court, you will get limited legal cover. The limits of this cover are defined in your policy.
Defining Professional Indemnity Insurance
PI insurance protects against liability claims made by third parties who have allegedly suffered losses directly related to the services that you've rendered. For example, a nutritionist will be subject to such claims if they fail to provide an appropriate diet for their client and medical complications ensue. Note that this type of insurance will cover the damages allegedly suffered by the claimant.
What does professional indemnity insurance cover?
Damages due to your negligence - Personal injuries, property damage, and financial losses caused by your negligent acts while rendering your services
Damages due to your contractor/employee's negligence - Losses incurred due to negligence of your employees or contractors
Defamation - Spoken or written false statements that may harm a third party's reputation
Breach of professional duty - Breach of confidentiality, privacy, or trust
Public relations expenses - PR meant to protect your reputation
FAQ
Why is Professional Indemnity Insurance Important?
PI insurance is important as it helps you address claims due to errors or allegations of mistakes made while rendering your professional services. Your insurance will bear part of the legal action expenses involved in settling these claims.
What if I don't provide the ARBV with my professional indemnity insurance policy documentation?
Without a copy of the Certificate of Currency for your PI insurance, the ARBV may reject your application or suspend the registration altogether.
What's the difference between Public Liability Insurance and Professional Indemnity Insurance?
Professional indemnity insurance covers claims made against you concerning your professional advice or services. For example, PI policy may cover engineers who are subjected to liability claims due to errors in their structural design.
Public liability insurance, meanwhile, covers claims related to your interactions with the public. When, for example, a visitor slips and falls while on your business premise, your insurance has you covered if they decide to make a claim.
I am applying to register as a practicing architect. Do I need professional indemnity insurance?
Yes, you do. The ARBV will require you to provide a copy of your policy's certificate of currency and other relevant documents.








