10 Things You Should Know About Professional Indemnity Insurance

There are many things you should know about professional indemnity insurance Sydney, but don't worry – we have summarised these in a straightforward and accessible manner in this article.  

Professional indemnity (PI) is a compulsory part of running your business and is meant to protect you from future claims made against your work or services. However, if you don't have it and a claim arises, it can cost you a lot of money, take some time to sort out and even limit the case against you. 

You've all experienced confusion when buying insurance, especially when it comes to professional indemnity insurance. Most small businesses feel lost regarding this type of insurance and are unsure whether they need professional indemnity insurance in the first place!  

Below we are going to discuss ten important things about professional indemnity insurance, so keep reading! 

 


  1. Is It Just For Doctors? 

Professional indemnity insurance is often thought of as being for doctors and other medical professionals. Still, it's actually available for anyone who does a job that might lead to legal action being taken against them.  

This could include accountants, lawyers and architects, among others. It doesn't matter what kind of job it is — if there's a possibility that someone could sue you because of your work, then this type of insurance could help protect your assets in case they do so successfully. 


  1. It’s Not Costly 

The cost of professional indemnity insurance Sydney varies depending on your location, business size and the nature of your work. For example, a solicitor might pay $1,000 annually, while an accountant could pay around $500.  

The average cost is about $100 to $300 per year, but it can be as high as $1500 or more for larger businesses that deal with high-value clients or have complex operations. 


  1. There Is An Excess 

The excess is the amount you pay towards any claim made against you before the insurance company starts to pay out on it. You can choose to pay a higher premium in exchange for a lower excess or vice versa. 


  1. You Need To Know What PI Insurance Cover 

Professional indemnity insurance (PI) protects you from claims made by clients, customers and contractors who say that the work you've done for them has caused them loss. It also offers protection against any claims made against you by your professional body. 

It doesn't protect you against losses that are the result of your negligence (such as making mistakes) or malicious acts committed by third parties.  

In addition, it won't cover losses unrelated to your work as a professional - for example, if someone is injured at your home because you didn't fix a loose floorboard, this wouldn't be covered either. 


  1. It Provides Retroactive Cover 

The retroactive cover is an essential feature of any PI policy, which means that you're covered for claims made against your business before the policy starts.  

This can be critical in protecting your financial position if you've been practising for some time without cover. It also helps protect your business from bad publicity or adverse press coverage, which might affect future bookings. 

You may need to obtain retroactive cover if you have been practising for some time without it, and there is a claim against you that occurred before you took out your policy. Retroactive cover will protect you for up to 12 months before you purchase your professional indemnity insurance policy. 


  1. It Offers Runoff Cover 

Runoff cover is an extra layer of protection for professional indemnity insurance Sydney. It's designed to protect you in the event that a claim against your business or individual has not been resolved by the end of the policy period. 

The way it works is that if a claim is made against your business or individual during the policy period and is still unresolved at the end of that period, then runoff cover will pay out on that outstanding claim.  

This means you don't have to wait until the claim is settled before receiving payment from your insurance provider! 


  1. Know The Difference Between Claims Made And Claims Occurring Cover 

It’s important to understand that there are two types of cover: claims made and claims occurring. Claim-made policies must be purchased within two years of the first date on which a claim could be made against you (such as when you enter into an agreement with a client).  

Claims occurring policies are designed for businesses that want broader protection over time. 


  1. Contract Conditions And Policies 

Contract conditions and policies are an essential part of professional indemnity insurance. They are the terms that govern how your business can be sued for damages, what you can do to avoid being sued and what can happen if you lose a case. 


  1. The Right Type Of Covers 

You may have heard of “all-risks cover” and “specified perils cover”. All-risks cover is the most common policy for professional indemnity insurance, but you might find that some insurers offer specified perils policies.  

These tend to be cheaper, but they can result in a wider range of exclusions. 


  1. Geographical Limits for Coverage 

You should make sure that there is sufficient cover for any claim made against you in another country too.  

Some insurers will offer worldwide coverage, while others will only provide it within the country you're residing in. You should always check this with your insurer before buying any policy. 


Conclusion 

The purpose of this article was not just to give you a brief overview but also to get you to take action on your own insurance. Also, we hope that you are now aware of the importance of professional indemnity insurance Sydney and how it can benefit your business.


Disclaimer: This is a generic Information & post; content about the services can be changed from time to time as per your requirements and contract. To get the latest and updated information, contact us today or visit our website



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