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Professional indemnity insurance for consultants
When a client relies on your advice and it goes wrong, the claim is about money, not injury. Professional indemnity covers that. Here’s what client contracts ask for, how cover works after a project ends, and how to compare quotes.
- No phone number needed to request quotes
- Add public liability and cyber in the same request
Do consultants need professional indemnity insurance?
Most consultants need it because their clients ask for it. Australian Government contracts, and many corporate ones, require you to hold adequate insurance and show proof on request. Even without a contract clause, professional indemnity is what pays to defend a claim that your advice caused a client a loss.
business.gov.au describes professional indemnity as cover for the cost of legal action over mistakes, neglect or breaches of contract that result in a loss for your client. For a sole trader, that claim is against you personally.
What a claim against a consultant looks like
| Consultant | The kind of claim professional indemnity responds to |
|---|---|
| Management or strategy | A client says a recommendation you made led to a costly decision. |
| IT and technology | A system you specified or delivered fails and the client loses revenue. |
| Project management | A missed deadline or budget overrun is blamed on your oversight. |
| Marketing and communications | A campaign is said to breach someone’s copyright or a consumer law requirement. |
| HR and recruitment | A client says your process or advice exposed them to a claim. |
Financial, accounting and health consultants are arranged through a licensed broker, because their cover is set by their regulator or professional body.
Reading the insurance clause in a client contract
The Commonwealth Contract Terms, used across Australian Government contracts, say the supplier will maintain adequate insurances for the contract and provide proof when reasonably requested. Panels and tenders then set the actual minimums. Before you sign, check:
Why cover after the project matters
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. A client can raise a problem long after you’ve invoiced, so a consultant who lets cover lapse between contracts can be left without cover for past work.
| Term | What it means for a consultant |
|---|---|
| Retroactive date | Work done after this date is covered. Keep continuous cover and the date carries forward. |
| Run-off cover | Cover for past work after you stop consulting, take a permanent role or close the business. |
| Notification | Tell your insurer about circumstances that could become a claim while your policy is current. |
What affects the price for consultants
The type of advice you give drives most of the price, followed by the size of your fees and your clients. Insurers will ask about your fee income, the limit you need, your claims history and whether you work for clients overseas, especially in the USA.
The professional indemnity insurance page covers every price factor, what’s covered and what isn’t.
What professional indemnity won’t do for a consultant
These need separate cover:
- Someone trips over your bag in a client’s office.That’s public liability. Public liability
- Your laptop is hacked and client data leaks.Cyber insurance covers response costs and losses. Cyber insurance
- You can’t work because of illness or injury.Income protection or personal accident cover, which a licensed broker arranges. Income protection
How to compare as a consultant
Consultant professional indemnity questions
Is professional indemnity insurance compulsory for consultants?
Not by law for most consultants, but client contracts usually require it. It’s compulsory for some regulated professions, such as registered tax agents, financial services licensees and registered health practitioners.
How much professional indemnity cover does a consultant need?
At least what your contracts require. Beyond that, consider the largest loss a mistake in your advice could cause a client, and whether defence costs are inside the limit.
Do I need cover if I consult through my own company?
Yes, if your clients require it or a claim could reach the company. The policy should name the entity that signs your contracts.
What happens to my cover when I stop consulting?
Because cover is claims-made, a claim about past work after your policy ends may not be covered. Run-off cover protects past work after you stop. Check whether your contracts require cover for a period after the work ends.
Does professional indemnity cover public liability claims?
No. Injury to people and damage to their property is public liability. Many consultants hold both, and you can request them together.
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