For professionals or anybody who provides services, committing an error could mean different types of unfavourable circumstances such as an unsatisfied client filing a lawsuit against the provider.
Whether you own or run a business or simply hooked into the field of providing services, it is important that you be insured to what could possibly backfire after committing an unintentional fault. And, that is why professional indemnity insurance was built for Australian industries.
What is professional indemnity insurance?
By definition, professional indemnity insurance comes with the purport of hedging professionals from the cost it could incur upon customer complaints and filed lawsuits. This also give the insurer an extent of protection to retain his or her professional practice should it be subject to legal action and court trials. You can read more about the definition here: http://en.wikipedia.org/wiki/Professional_liability_insurance
Professional indemnity insurance is simply designed to handle costs and or claims for any damage done to the third parties arising from an act, breach or omission of professional duties throughout the course of the business.
If an omission or a mistake happens within the course of the professional’s work resulting to financial loss, injury or any damages towards the third party such as the customer, that customer always has the option to commence legal action pointing to the business in order to cover for the losses. Professional indemnity coverage aims to protect not only the assets of the insurer, but also his or her reputation.
What occupations must have professional indemnity coverage?
This type of insurance is vital when your job involves the provision of professional advice to client, either financially, legally, medically and so on.
Therefore, these following occupations are needful to have professional indemnity insurance stapled to them:
- IT Consultants
- Personal trainers
- Dance instructors
- Recruitment consultants
- Business consultants
- -Management consultants
How much coverage do you need?
The determining factor for what your professional indemnity policy will cover will always depend on the figures stipulated within your professional services.
Another factor will be your average net income per annum or for every six months depending on the insurance provider.
Also, the contingencies on the amounts the third parties could possibly lose in the process of unintentional malpractices will also play a vital role. Nonetheless, the common coverage limit for professional indemnity policies would be 1,000,000.00 AUD.
Complaints, claims, and how frequent they occur
Complaints are relative to claims. The primary occurs rather frequently while the latter can be rare yet impinging towards the professional services provider. Complaints are rather easier to settle since it is usually just triggered by minor faults, which may not have involved the loss of money but more on the lack of efficiency by the advice given. On the other hand, complaints are simply for the purpose of professional negligence. It is brought up against the provider when he or she has led to serious funds loss of the third party or the clients.
A good example to this would be a business management adviser who set out a purported effective management platform that only boiled down to the recession and decline or sales rates for the third party. This is considered a legal offense and is taken seriously by the local office of justice and the court.
As to the frequency of claims, they are relative from one professional field to another. But statistically, those in the medical, legal, financial and business fields have more tendency to receive claims.
How Much Does Professional Indemnity Insurance Cost?
It will always depend on the insurance provider as well as the nature of the profession the policy applicant holds. The length of practice rendered by the applicant will also be considered as this will branch out to the total amount of earnings and annual income.
Usually, for beginners in the professionals practices, there are policies that only require 500 to 1000 AUD monthly premiums.
If you are planning to apply for professional indemnity insurance, you are definitely making the right choice. Just don’t jump to the first option you see. Try to seek for multiple quotes and choose the best one by coverage and by price.
If you ever have difficulty with your insurance company or want to make a complaint, you can visit the Financial Services Ombudsman who will be able to help you out.