Who Needs Professional Indemnity Insurance In Australia?

Do you frequently give people advice in return for a fee? Is your primary business activity part of the allied health or healthcare sector? If you answered yes to either of those questions, you need to be sure you have proper professional indemnity insurance.

Although most businesses are exempt from the requirement by Australian law, understanding the definition and the different advantages of having professional indemnity insurance should be at the top of your to-do list, especially as a small business owner.

What is Professional Indemnity?

Professional indemnity insurance acts as a safeguard when you are giving advice or services to a third party in exchange for a fee. The third party is likely to rely on your advice, making you liable for any wrong or incorrect information given. Certain businesses are required to have professional indemnity protection under Australian Law, but your professional field will often set the standards.

Moreover, professional indemnity insurance is different than public liability insurance. Public liability insurance gives your business protection against financial loss due to accidents (such as slips, injuries etc), while professional indemnity insurance safeguards your business against claims of professional service breach or negligence resulting in financial loss. However, both can result in financial damages being owed to a third party, leading to both types of insurance coverage being required to ensure you are properly protected.

Why is Insurance an Important Factor?

Most negligence cases resulting from professional indemnity can be costly with the potential to bankrupt your small business. In addition, sole traders and partnerships have little separation of business and personal assets. In the event that your insurance coverage is not enough to pay the lawsuit, the court could come after your personal assets. Furthermore, proper insurance can help add to your professional reputation. If a lawsuit does occur, you can protect your professional reputation and let the insurance companies work out the details, keeping costs low.

Who Needs Professional Indemnity Insurance?

All businesses can benefit from professional indemnity insurance, especially those in the allied health and healthcare sectors. Therapists, support workers, and personal trainers and the like are all at potential risk. The advice they give their clients regarding health directly impacts their decisions, leading to added protection being necessary. Business size also doesn’t determine the need for professional indemnity insurance. Small businesses benefit just as much if not more compared to large corporations when they take advantage of the added protection when a lawsuit does occur.

There are some circumstances where professional indemnity insurance is required, such as for nurses.

In other cases, if your business provides advice to someone, or there may be acts of negligence involved, it might be the safer option to get professional indemnity insurance.

Next Steps

Still unsure whether or not you need professional indemnity insurance? Check out our instant quote generator which will give you an estimate on your policy in seconds! If professional indemnity is something that can benefit your business, or is required to be held, it will be included in your estimate.