Legal requirements for Professional Indemnity insurance

When you’re in the business of giving advice or providing a specialist service, you may need insurance to protect against mistakes, negligence, and other types of professional wrongdoing. In Australia, having coverage may even be a legal requirement.

What is Professional Indemnity* insurance?

Professional Indemnity (PI) insurance protects businesses that provide professional advice or specialist services. It is designed to respond to claims against your business for losses resulting from actual or alleged negligent acts or omissions in delivering your professional service or advice. PI Insurance will also assist with legal costs associated with responding to or managing claims covered by the policy.

Is Professional Indemnity compulsory in Australia?

Some occupations are required to have minimum amounts of PI coverage. This requirement may be set by state or federal legislation, a professional regulator, or an industry body.

Occupations that are legally required to have Professional Indemnity insurance include:

• Accountants
• Architects and draftsmen
• Bookkeepers, BAS and tax agents
• Electricians in QLD
• Finance and mortgage brokers
• Plumbers in VIC
• Real estate agents in NSW
• Registered migration agents

Information on minimum coverage for each occupation can be found on government websites or through your professional organisation.

Should I have Professional Indemnity cover even if it’s not required?

Small businesses may have Professional Indemnity cover, even when it is not a legal requirement.

For some, having Professional Indemnity cover helps them meet client expectations. While it may not be mandatory in some industries, your clients might still expect you to have PI cover. It’s not uncommon for maintaining minimum amounts of coverage to be part of a business contract. Professional Indemnity may also be necessary to receive government contracts.

Others simply enjoy the peace of mind that these policies can bring. A PI claim can be expensive, potentially leading to hundreds or thousands of dollars in legal fees, compensation, and public relations costs. A PI policy could cover these expenses for you, so you don’t have to.

Showing proof of your Professional Indemnity cover

You may need to show proof of your PI policy to receive or renew a professional licence, bid on government contracts, or sign a contract with a client.

To do this, you may be asked to provide a Professional Indemnity certificate of currency. This is a document that confirms your policy is current (“in force”) as of the date the certificate was issued, the level of cover you have, and other details about the policy.

Certificates of currency are often downloaded from your insurance provider’s website. Your insurer should also provide an updated copy whenever your policy is amended.

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