For businesses providing services of any kind, professional indemnity (PI) insurance provides essential protection in the case of a mistake or oversight that results in a customer or client bringing a legal case against the service provider. One of the most valuable aspects of PI cover is that it can be customised to suit the specific needs of different professions.
Its ability to be tailored to cover the unique risks and liabilities associated with a particular profession or industry is achievable through the available extensions that can be added to most standard policies.
There are some 20 possible extensions ranging from defamation to joint venture liability, giving PI cover the flexibility to apply to a broad range of risks for service providers.
Some extensions may be included with a PI policy, while others can be bought, with some extensions subject to a sub-limit and variable excesses. The availability and scope of extensions may also depend on the insurance provider and policy terms.
How PI insurance works
PI insurance is designed to cover civil liabilities for professionals potentially facing financial losses resulting from legal claims in relation to the services they provide. It includes coverage for legal defence costs, settlements or judgements that may arise from such claims.
Depending on the insurer there may be variations in the terms of the policy. It's advisable to review the detail in a PI policy with guidance from an insurance broker.
Which PI extensions are most popular with Australian service providers?
Some of the most popular extensions to standard PI insurance cover, limits and sub-limits in Australia include:
- run-off cover: provides coverage for claims made after a professional has retired or ceased practising
- cyber liability: some cover may be available as an extension to a PI policy but caution and guidance from a broker is recommended
- fidelity cover: protects against losses caused by dishonest acts of employees, such as theft, fraud or embezzlement (may involve sub-limits)
- legal representation costs: covers legal costs incurred in defending a claim, including legal representation fees, court costs and expert witness fees
- loss of documents: covers the costs associated with recreating or replacing lost or damaged documents
- public relations expenses: covers the costs of hiring a public relations firm to manage the reputation of the insured professional or their business in the event of a claim
- fines and penalties: some fines and penalties may be recouped through PI insurance
- inquiry/investigation: covers the cost of probing the basis of allegations made in legal claims
- mitigation/rectification: covers costs of restoring or replacing faulty work
- defamation: covers the legal costs of defending a claim incurred by maligning another person or business.
What are the benefits of adding extensions to a professional liability policy?
Having PI extensions on your insurance policy can provide added value in a variety of ways.
- Enhanced coverage: PI insurance covers service providers against claims of negligence, errors or omissions by clients or customers. Having extensions can enhance the cover by including additional risks specific to your profession or industry.
- Compliance with industry requirements: some industries or professional bodies may have specific insurance requirements. Having PI extensions can help with meeting compliance with industry requirements.
- Professional reputation: if a claim is made against a business, PI cover can provide financial support for legal defence costs, settlements or damages and the cost of conducting background inquiries.
- Client confidence: being able to demonstrate relevant PI extensions shows a commitment to professionalism and gives clients and customers confidence that their interests are protected.
- Peace of mind: comprehensive PI insurance with extensions can provide peace of mind that comes from knowing potential claims or liabilities are covered.
As your broker we work to secure cover on optimal market terms
At Gallagher we work with a large variety of businesses, with unique risks, challenges and circumstances, including many businesses with hard to place risks. As a leader in risk management, we provide expert guidance in meeting insurer expectations through the renewal process, to access cover that achieves confidence in business risk protection solutions.
Let Gallagher be your trusted partner in navigating the evolving insurance landscape and your upcoming renewal, or consider a complimentary Gallagher business insurance risk review.