What Level Of Professional Indemnity Cover Do I Need?

Studies show that 62% of small to medium-sized businesses in Australia don’t retain the proper insurance coverage for their business operations. Insurance cover is essential to protect your business and personal assets from collections when you give advice that customers rely on, but insurance normally comes with limits on how much you are covered for.

In this article, we'll dive into the level of professional indemnity insurance most business owners will want to consider.

What Is Professional Indemnity Insurance?

Professional indemnity insurance is designed for businesses that give advice that customers rely on. In exchange for your advice, you are generally paid a fee. Any wrong information can lead to a lawsuit for damages. The Australian Government does require some businesses to obtain professional indemnity coverage; however, your industry will generally set the standard.

Many small businesses confuse professional indemnity insurance for public liability insurance, so it's important to understand the differences. Be sure to visit this article on professional indemnity insurance and this article on public liability insurance to help you get a better understanding of both products.

What Level Of Professional Indemnity Cover Do I Need?

Finding the right level of cover (also known as limit) should be a top priority as a business owner. First, analyse if you are subject to professional indemnity. Do customers or clients rely on your advice? If a customer utilises your advice, are injuries possible? If you answered yes to either of these questions, you should look into professional indemnity coverage.

Sole traders and other businesses in the allied health and contractor fields generally need to have high coverage for professional indemnity. This is because their opinions directly impact the customer. For example, let’s say you own a physio therapy business. If you were to advise your client to do a certain exercise, but it results in further injury, your customer could sue you for negligence.

Your sales level and risk of injury will both impact how much professional indemnity coverage you need. The larger the business, the higher coverage that you will need. Smaller businesses might settle on around $1,000,000 of coverage while large enterprises may choose to insure up to $20,000,000 or more.

There are also some occupations, such as nurses, where it is mandatory to hold professional indemnity insurance.

When it comes to determining the limit you should get, it really is up to you to figure out.

What Should I Look For In An Insurance Provider?

Finding the right professional indemnity cover and provider takes careful research.

First, you want to assess your overall business needs to consider bundling insurance. For example, your business might benefit from both public liability and professional indemnity coverage.

When looking for a provider, be sure they offer both types of insurance if that's what you're after.

Additionally, you should take into consideration the cost of insurance and what each policy comes with, keeping in mind that costs generally vary based on a range of factors, including what the policy does and does not cover.

To make it easier for you, we've partnered with leaders in the insurance world. To get a quote on your professional indemnity insurance, visit our instant quote generator today.