Why do you need Professional Indemnity insurance?
A professional person, in holding himself or herself out as the possessor of expert knowledge and special skills not shared by the rest of the population, owes a duty to his or her clients to exercise that degree of care and skill which is to be expected of a person in that particular profession.
If the professional, in rendering his or her services, fails to exercise the required level of care and skill and this results in injury, damage or pure financial loss being sustained by a client, then, the professional may be sued by the client for damages or compensation.
The main purpose of Professional Indemnity insurance is to cover a professional in the event that the professional is pursued by a client or other third party who claims that they have suffered injury, damage or pure financial loss as a result of a breach of professional duty by the professional.
What protection will a Professional Indemnity policy provide?
Under a Professional Indemnity insurance policy the insurer agrees to cover you against any Claim for civil liability Clams for damages or compensation, arising from a breach of professional duty owed in the conduct of your professional business, that is first made against you and notified to the insurer during the Period of Insurance.
With respect to any such claim, the insurer agrees to cover you for:
- the payment of damages or compensation awarded against you.
- claimant’s costs and expenses that are awarded against or recoverable from you.
- defence costs incurred by you or on your behalf with the insurer’s prior written consent.
Furthermore, a Professional Indemnity insurance policy will usually, among other things, include the following extensions of cover:-
- unintentional Defamation.
- Continuous Cover.
- unintentional infringement of Intellectual Property Rights.
- unintentional Breach of Confidentiality.
- Dishonest, Fraudulent, Malicious or Criminal (Innocent Party Cover).
- Official Investigations and Inquiries.
- Loss of Documents.
- unintentional breaches of the Competition and Consumer Act 2010 (Cth).
- Automatic Reinstatement of the Limit of Liability