Professional Indemnity Insurance

What is Professional Indemnity Insurance?

Professional indemnity insurance covers liability for claims arising from a breach of professional duty by reason of any negligent act, error or omission committed on the part of any person employed in the conduct of the business activities.

A feature of virtually all professional indemnity insurances is that the policy is written on a "claims made", rather than an "occurrence" basis. This means that any event or circumstance that may give rise to a claim being made at some time in the future is to be reported to the insurer at the time the event or circumstance is identified. If the notification is made to the insurer during a subsequent insurance period, the insurer may not accept liability in the event the broker has been held liable for the loss or damage.

Why is professional indemnity insurance essential?
The policy is intended to provide a recourse and protection for the consumer in the event of wrongdoing in providing advice and arranging services for clients. Compliance with the policy terms and conditions, particularly relating to the notification and management of potential claim circumstances, is an essential feature of the policy to provide you with the intended cover.
What is the value of professional indemnity insurance?
In the event a client commences an action against the policyholder for negligence, generally the professional indemnity insurer will assume responsibility and manage the claim. This may involve the appointment of legal representation to review the circumstances and documents relating to the broker’s dealings with the client. The insurer will decide its position after examining all of the facts and the evidence provided.
If the insurer accepts that the insured has committed a negligent act and the client suffered a loss as a result, the insurer will settle the claim with the client in behalf of the insured.