Professional Indemnity Insurance in Australia

Protect your business from potential legal costs and claims with professional indemnity insurance. 

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What you need to know

  • Professional indemnity insurance is a legal requirement in many industries.
  • If your business provides a professional service or advice then there is a chance of human error or a disgruntled client - Professional indemity insurance can help you when you are on the receiving end of a lawsuit.

How much does professional indemnity insurance cost?

That's tough to say. It'll depend on a few different factors including the type of work you do, your annual revenue, and the level of cover you'd like.

In 2021, we requested three different quotes from five different insurers, to get a picture of how much professional indemnity insurance might cost for a self-employed tax agent with $150,000 annual revenue. Here's what we found:

BrandCost for $250,000 coverCost for $500,00 coverCost for $1,000,000 coverExcess payable on claims
AIG$644.38$649.05$994.35$1,000
Berkley$361.21$361.21$691.92$0
DUAL$479.31$479.31$644.44$1,000
QBE$327.75$415.24$619.38$1,000
Vero$389.20$411.07$498.57$0
Average$440.37$463.18$689.78$600

Data was taken from our quoting engine.

What's covered by professional indemnity

Professional indemnity is designed to protect you and your business if you ever make a mistake at work and the client sues. It'll also protect you if you didn't make the mistake, but you have an unhappy client who claims you did. But it won't protect against everything.

Covered

  • Breach of duty. You fail to lodge a client's important paperwork in time.
  • Breach of privacy or confidentiality. You accidentally share a customer's personal information online.
  • Defamation, libel or slander. You publish something online which damages a person's reputation.
  • Intellectual property infringement. You accidentally breach copyright laws in a design you give to a client.
  • Legal fees. The legal costs of investigating, defending and settling claims.
  • Reputation repair. Public relations costs deigned to repair your reputation if it's damaged.
  • Loss or damage to documents. A tax agency is severely damaged along with receipts given by clients.

Not Covered

  • Issues known prior to insurance. You receive a complaint from a customer then take out cover
  • Criminal conduct. You use your client's information to open a credit card.
  • Damage to property. You visit a client's home and accidentally break something.
  • Intentional acts. You use below-standard materials for a house you are working on.
  • Fraud and dishonesty. You claim to have qualifications that you do not.
  • Fines and penalties. If you are ordered to pay a fine, this is unlikely to be covered.
  • Bankruptcy. If your business goes bankrupt, your policy won't cover related claims.
  • Accidental injury. You a construct a faulty wall which ends up collapsing on someone.

Key factors that will affect your quote

Professional indemnity insurance isn't one-size-fits-all. Lots of different factors are taken into account when calculating the price you pay. They include:

  • Number of staff. The more staff employed at your company, the higher your premium will be. That's because as the number of employees grows, so does the chance of human error.
  • Annual turnover. Businesses with a lower annual turnover will enjoy lower premiums. That's because you face less financial risk than others.
  • Type of client. If you work on large-scale, multi-million dollar projects, your premiums will be higher than if your clientele is on the lower end of the spectrum.
  • Industry. Certain industries carry higher premiums as the potential cost of mistakes is higher. For example, a lawyer would face higher premiums than a graphic designer.
  • Claims history. Have you been sued before? If so, you'll likely face higher premiums than someone who hasn't.
  • Benefits. Not all policies are created equal. A more comprehensive level of cover will cost you more money.
  • Excess. The excess is the amount you pay first, if you ever have to claim. The higher the excess, the lower your monthly premiums.

Do I actually need professional indemnity insurance?

In some cases, yes.

  • Professional indemnity insurance is a legal requirement in many industries. These vary between states so it's worth double checking.
  • Professional indemnity insurance is typically a basic requirement in business contracts, especially if you are dealing with other companies or councils.
  • Professional associations and industry bodies often require their members to have professional indemnity insurance.
  • Some industries require professionals to have professional indemnity insurance before they receive full accreditation.

Even if you don't technically need professional indemnity insurance, it's still a good idea to consider it.

No matter how careful you are, there is always the risk of error. Further, illegitimate claims can also end up costing you a lot of money, not to mention your reputation.

Professional indemnity insurance ensures your business can continue to operate despite having to cover legal costs.

Case studies for specific occupations

Here are some real life examples of professional indemnity insurance claims:

Accountant

Accountant

An accountant advised their client that an expense was tax-deductible. The ATO investigated the claim and fined the client. The accountant was liable to pay legal fees to defend the claim and pay compensation to the client. Having professional indemnity insurance ensured those costs were covered.

Building inspector

Building inspector

A building inspector completed a pre-purchase report for a client buying a new house. It was later found that there was significant structural damage in the roof that was not identified in the report. The client sued the building inspector for damages. The building inspector's expenses were covered by their PI insurance policy.

Event manager

Event manager

An event coordinator double-booked a room at a function centre, resulting in the cancellation of one of the events. The client whose event was cancelled made a claim seeking damages for lost business and to recoup expenses. The events coordinator was able to cover these costs because they had a PI policy in place.

Why price isn't everything

We understand that price is important - but it shouldn't be the only factor you look at when choosing professional indemnity insurance. Keep an eye out for insurers that:

  • Understand your industry and manage policies of other similar businesses.
  • Can produce evidence of favourable outcomes for clients
  • Are approved by your industry's governing body or membership association
  • Have clear policy guidelines regarding inclusions and exclusions
  • Take a personal approach and assess your business specifically

It is important to get a number of quotes and talk to a variety of insurers before committing to any particular policy.

Some important things to understand

When looking for professional indemnity insurance, you'll come across some terms you might not have heard of before. We've cleared them up for you here.

TermWhat it means
Claims madeIf you switch insurers after the event occurs, but the claim is made under a new insurer, the new insurer must handle the claim.
Run-off coverRun off cover extends the policy after you have stopped trading. For example, if someone makes a claim after you've sold your business or retired.
Fidelity insuranceAn additional cover that protects you against dishonest acts by employees. It can be taken out as a separate policy or included as an extension.
Policy retroactive dateThe date from which your professional indemnity insurer will cover you. Typically, the retroactive date will either be unlimited or specified.

An unlimited retroactive date means the insurer will cover claims regardless of when they occurred. A specific retroactive date will only offer cover after a specific date.

Cost inclusiveLegal defence costs are included in the maximum amount your insurer will pay for a claim.
Cost exclusiveLegal defence costs are covered in addition to the limit of indemnity, which means it could be a more desirable option.

Talk to a broker about professional indemnity insurance

Professional indemnity insurance is complicated. Fill out the form below, to receive free advice from a broker.

Find the right professional indemnity insurance for your business

If you are ready to speak with a consultant about different business insurance options available, simply enter your details in the form. Keep reading if you want to learn more about the different types of cover available.
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32 Responses

    Default Gravatar
    JennyMay 8, 2023

    Wanting to find out about professional indemnity insurance for a midwife doing pre and postnatal care like a doula. Not doing births

      Avatarfinder Customer Care
      JamesMay 10, 2023Staff

      Hi Jenny,

      Thanks for reaching out. Professional indemnity cover is an important consideration for doulas. You could start by completing the broker form near the end of this article to get more information on your specific needs.

      Best wishes,

      James

    Default Gravatar
    AdamJuly 17, 2018

    How much does business insurance usually cost?

      Default Gravatar
      JoelJuly 17, 2018

      Hi Adam,

      Thanks for leaving a question on finder.

      As with most types of protective insurance, the cost for cover to be taken out can vary dramatically depending on the insured’s cover needs. In the case of professional indemnity insurance, this will depend on whether the policy is for a sole trader or for a business looking to provide cover for a significant number of employees. While sole traders may be able to get adequate cover for just a few hundred dollars, the cost of insuring a multinational company could run into the hundreds of thousands of dollars. Key factors that impact what you pay include:

      – Number of staff employed by company and annual turnover. Sole traders or companies with say 15 employees won’t require the same level of cover as large-scale organisation.

      – Types of clients that company/professional services. Professionals that work on large-scale,. multi-million dollar projects will require a higher level of cover than smaller firms.

      – Industry. The nature of the service provided and the level of risk for claims being made will impact how much is paid for cover.
      Policy inclusions and exclusions. Obviously more comprehensive protection packages with increased levels of cover will cost more than more basic policies.

      – The cost of professional indemnity insurance is largely based on the percentage of your companies total legal spend and the likelihood of the company being taken to court. The insurer that you go with and the policy that you choose will also play a major role in the final cost of cover.

      To get a professional, personalized advice about business insurance, I suggest you fill out the form above to speak to an insurance broker.

      Cheers,
      Joel

    Default Gravatar
    ChristinaAugust 3, 2017

    Regarding aged care and disability services, are cheaper premium payments possible under professional indemnity insurance if regular employee training is provided to staff?

      Default Gravatar
      ArnoldAugust 4, 2017

      Hi Christina,

      Thanks for your inquiry.

      Usually, if regular employee training is provided to the staff there is a possibility of lowering the premiums. In order to confirm this, you may have to contact your insurer.

      Hope this information helped.

      Cheers,
      Arnold

    Default Gravatar
    AllieJuly 18, 2017

    I am establishing an online business that sells parenting resources and ebooks. I don’t have any qualifications as such but have developed my resources based on experience. Do I need professional indemnity insurance and/or products liability insurance?
    thanks

      Default Gravatar
      JonathanAugust 1, 2017

      Hello Allie,

      Thank you for your inquiry.

      As of the moment, recommending which cover to take is within the scope of a licensed insurance broker. You can leave your details on the “Enquiry Now” form so that you will be interviewed and assessed to know which type of covers suits your needs.

      Hope this helps.

      Cheers,
      Jonathan

    Default Gravatar
    LauraAugust 1, 2016

    Can I cancel my policy if I wish at any time? And is there any cancellation fee prior to the termination date of a professional indemnity insurance?

      Avatarfinder Customer Care
      RichardAugust 2, 2016Staff

      Hi Laura,

      Thanks for your question. finder.com.au is a comparison service and we are not permitted to provide our users with personalised financial advice. Generally, you are entitled to cancel your policy as soon as your insurer receives a written request from you to cancel the policy. Whether or not there is a cancellation fee will depend on your insurer, as there may be an administration fee applicable.

      I hope this was helpful,
      Richard

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