General FAQs

There isn’t one “right” amount, but in Australia common professional indemnity (PI) limits for sole traders are often $1m, $2m, $5m or $10m. The level you choose usually comes down to what your clients require and how big the financial impact could be if something goes wrong.

A common real-world example

Let’s say you’re a sole trader providing a professional service, such as allied health, bookkeeping, IT consulting, or business consulting.

• A client says your advice, report, or service was wrong or incomplete.
• They claim it caused them a financial loss (for example: extra costs to fix the issue, lost income, penalties, or having to redo work).
• Legal costs may also be involved, even if you believe you did the right thing.

In situations like this, many businesses and contracts commonly ask for $1m–$2m as a starting point, while higher-risk work, larger clients, or contracts (including some health and government-related work) may ask for $5m or more.

A practical way to choose a limit

Start with:

1. Your contract requirements (often the minimum you’ll need to win work), then
2. The largest job you do and the worst reasonable loss a client could claim if you made a mistake.

If you’re unsure, it can help to pick the limit that matches your biggest client requirement and your biggest exposure, then review it as your business grows.

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