Guide
What is professional indemnity insurance?
Professional indemnity protects you when a client says your advice or service cost them money. Here’s what it covers, who must hold it, and how claims-made cover works.
- Example claims by profession
- Who must hold it, with sources
Professional indemnity insurance, in one paragraph
Professional indemnity insurance covers you when a client claims your professional advice or service caused them a financial loss. business.gov.au describes it as cover for the cost of legal action over mistakes, neglect or breaches of contract that result in a loss for your client. It pays defence costs and any compensation you owe, up to the policy limit.
What a professional indemnity claim looks like
| Profession | Example claim |
|---|---|
| Management consultant | A client says your recommendation led to a costly decision. |
| IT consultant | A system you specified fails and the client loses revenue. |
| Designer or architect | A design error delays a client’s project. |
| Bookkeeper | A mistake in your work leads to penalties for your client. |
| Personal trainer | AUSactive notes PI can cover you if a client is injured following your instructions and you’re found at fault. |
Who must hold it
| Who | Requirement |
|---|---|
| Registered health practitioners | Ahpra’s registration standards require PI arrangements for all aspects of practice. |
| Registered tax and BAS agents | Tax Practitioners Board minimums by turnover, from $250,000 to $1 million. |
| Financial services licensees (retail clients) | ASIC RG 126: generally at least $2 million for smaller licensees. |
| Some Queensland building licences | QBCC classes such as building designer and site classifier. |
| AUSactive registered exercise professionals | Appropriate PI and public liability covering all their activities. |
How PI cover works
PI is written on a claims-made basis, so the policy that responds is the one you hold when the claim is made.
| Term | What it means |
|---|---|
| Claims made | Covers claims made against you and notified during the period of insurance. |
| Retroactive date | Work done after this date is covered. Continuous cover keeps it. |
| Run-off cover | Cover for past work after you stop, retire or sell. |
Professional indemnity by the numbers
Insurers wrote A$2.35 billion of professional indemnity premium in the year to 30 June 2026, according to APRA’s quarterly statistics, almost unchanged on the year before. The professions that buy it are growing faster than that: the ABS counted 366,289 businesses in professional, scientific and technical services at 30 June 2026, up 3.6% in a year, and 139,417 in financial and insurance services, up 4.3%.
How to get professional indemnity quotes
Professional indemnity questions
Is professional indemnity insurance compulsory?
For some professions, including registered health practitioners, registered tax and BAS agents, financial services licensees with retail clients and some Queensland building licences. For many others, client contracts require it.
What’s the difference between PI and public liability?
PI covers a client’s financial loss from your advice or service. Public liability covers injury and property damage. Many professionals hold both.
Does PI cover work I did before I bought the policy?
Only from the retroactive date on your policy. Keeping continuous cover protects your earlier work.
What is run-off cover?
Cover for claims about past work after you stop practising, close or sell the business.
Do sole traders need professional indemnity?
If you’re paid for advice or a professional service, a claim can reach you personally. Check what your clients and any licence require.
Compare the covers
More guides
Sources
- business.gov.au: Types of business insurance
- Ahpra: Professional indemnity insurance arrangements
- Tax Practitioners Board: Professional indemnity insurance
- ASIC: RG 126 Compensation and insurance arrangements for AFS licensees
- QBCC: Professional indemnity insurance
- AUSactive: Public liability vs professional indemnity for fitness professionals
- QBE: A comprehensive guide to professional indemnity insurance
- APRA: Quarterly general insurance performance statistics, June 2026
- ABS: Counts of Australian Businesses, including Entries and Exits, July 2022 to June 2026
Professional indemnity