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Professional indemnity insurance
Cover for when a client says your advice, design or professional service cost them money. Tell us what you do once and a licensed broker compares professional indemnity across our insurer panel for you.
- No phone number needed to request quotes
- Add public liability or cyber in the same request
- Financial and health professions go to a broker
What is professional indemnity insurance?
Professional indemnity insurance covers you when a client claims that your professional advice or service caused them a financial loss. It pays the cost of defending the claim and any compensation you’re found to owe, up to the policy limit.
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, such as incorrect advice. It notes that professional indemnity is mandatory for some professions. It’s different from public liability, which covers injury to people and damage to their property.
What it covers, and what it doesn’t
Wordings differ more for professional indemnity than for most covers, so the Product Disclosure Statement (PDS) is the final word. These are the inclusions and exclusions you’ll commonly see.
Usually covered
- Errors in your advice or work. A wrong specification, a missed deadline or a flawed recommendation that costs a client money.
- Breach of professional duty. A claim that you didn’t take the care expected of someone in your profession.
- Legal defence costs. Lawyers and experts to defend a covered claim, even one without merit.
- Some broader civil liability. Many policies also cover unintentional breach of confidentiality, copyright or defamation. Check the PDS.
Usually not covered
- Injury or property damage. That’s public liability.
- Claims you already knew about. Circumstances you were aware of before the policy started.
- Dishonest or fraudulent acts. Deliberate wrongdoing isn’t insurable.
- Promises beyond the law. Liability you take on by contract that you wouldn’t otherwise have.
- Fines and penalties. Along with your own business’s losses.
How professional indemnity cover works
Professional indemnity is written on a claims-made basis. The policy that responds is the one you hold when the claim is made and notified, not the one you held when the work was done. That’s why these terms matter.
| Term | What it means for you |
|---|---|
| Claims made | You’re covered for claims made against you, and notified to the insurer, during the period of insurance. |
| Retroactive date | Work done after this date is covered. It usually matches when you first bought cover, so keeping continuous cover protects your earlier work. |
| Run-off cover | Cover for past work after you retire, close or sell the business. Claims can arrive years after the work, so many professionals keep it. |
| Limit of indemnity | The most the insurer pays, often per claim and in the aggregate for the year. Check whether defence costs sit inside or on top of the limit. |
| Excess | The amount you pay towards each claim. |
Professional indemnity vs public liability
| Compared | Professional indemnity | Public liability |
|---|---|---|
| Covers | Financial loss caused by your advice or professional service | Injury to people and damage to their property |
| Typical claim | A client says your design error delayed their project | A client trips over your laptop cable in their office |
| Usually held by | Consultants, designers, IT, health and financial professionals | Any business that deals with the public or visits clients |
| Cover is based on | When the claim is made | Usually when the injury or damage happened |
Many professionals hold both. Our public liability insurance page covers the other half.
Who has to hold it
For some professions it’s a condition of registration or a licence. For many others, a client contract sets the requirement.
| Who | Requirement |
|---|---|
| Registered health practitioners | Ahpra’s registration standards require professional indemnity arrangements for all aspects of practice. |
| Registered tax and BAS agents | The Tax Practitioners Board sets minimum cover by turnover: $250,000 for turnover up to $75,000, $500,000 for turnover up to $500,000, and $1 million above that. |
| Financial services licensees (retail clients) | ASIC Regulatory Guide 126 generally means adequate professional indemnity, with a limit of at least $2 million for smaller licensees. |
| Some Queensland building licences | QBCC requires it for classes including building designer, site classifier, hydraulic services design and fire protection design. |
| Members of a professional standards scheme | Liability is capped only if you hold insurance or assets up to the cap. |
| Contractors and consultants | Client and government contracts often set a minimum. See PI for consultants. |
Health, financial and accounting professions are arranged through a licensed broker rather than quoted online, because their wordings and minimums are specific to the profession.
What affects the price
Insurers price professional indemnity on the risk in the work you do and who you do it for.
Who usually holds it
Anyone paid for advice, design or a professional service, especially where a client relies on the result.
When professional indemnity isn’t the right cover
Professional indemnity covers claims about your professional work. These need separate cover:
- A client is injured at your office or theirs.That’s a public liability claim. Public liability
- You’re hacked, or client data is breached.Cyber insurance covers response costs and losses from a cyber event. Cyber insurance
- Directors are pursued over how the company is run.That’s management liability, arranged by a broker. Management liability
- Your laptop or office equipment is stolen.Professional indemnity doesn’t cover your own property. Business insurance packs
- An employee is injured.Employers must hold workers compensation. Workers compensation
How to get professional indemnity quotes
Professional indemnity questions
Is professional indemnity insurance compulsory?
For some professions. Registered health practitioners, registered tax and BAS agents, financial services licensees with retail clients and some Queensland building licence classes must hold it. For many others, a client contract or professional body sets the requirement.
What’s the difference between professional indemnity and public liability?
Professional indemnity covers a client’s financial loss caused by your advice or professional service. Public liability covers injury to people and damage to their property caused by your business. Many professionals hold both.
What does claims-made mean?
The policy covers claims made against you and notified to the insurer during the period of insurance. The work itself must have been done after the retroactive date on your policy, so keeping continuous cover matters.
What is run-off cover?
Cover for claims about work you did in the past, after you stop practising, close or sell the business. Because claims can arrive years after the work, many professionals arrange run-off when they stop.
Do sole traders and contractors need professional indemnity?
If you’re paid for advice or a professional service, a claim can reach you personally as a sole trader. Contracts often require it too. Check what your clients and any licence or professional body ask for.
How much professional indemnity cover do I need?
Start with what your contracts, licence or professional body require. Then consider the largest loss a mistake in your work could cause a client, and whether defence costs sit inside the limit.
What happens if I don’t have professional indemnity insurance?
If a client claims your advice or service caused them a loss, you pay the legal costs and any compensation yourself. For registered professions it’s also a breach of your registration conditions: Ahpra, the Tax Practitioners Board and ASIC all require it. Many contracts won’t start without it.
How much does professional indemnity insurance cost?
It depends on your profession, fee income, the limit, your claims history and the retroactive date. There are no prices on this page. Our guide to what professional indemnity costs explains each factor.
Do I really need professional indemnity insurance?
If your profession is regulated you usually have no choice: registered health practitioners (Ahpra), tax and BAS agents (Tax Practitioners Board), financial advisers (ASIC RG 126) and Queensland building designers and certifiers must hold it. Outside those, the trigger is a contract: government, corporate and council clients routinely require PI before they engage a consultant, designer or adviser. If you give advice or deliver a professional service for a fee, assume a client will ask for it.
What does professional indemnity insurance cover?
It covers claims that your professional advice, design or service caused someone a financial loss: the legal costs of defending the claim and any compensation awarded, up to the limit you choose. Most policies also cover costs of investigations, court attendance and, in some wordings, the cost of fixing a mistake before it becomes a claim. It does not cover injury or property damage (that is public liability) or deliberate wrongdoing.
Keep reading
More cover to compare online
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
- Professional Standards Councils: Policy statement on professional indemnity insurance
- QBE: A comprehensive guide to professional indemnity insurance
Professional indemnity