Financial professionals rely on professional indemnity insurance to be able to operate their business. Accountants, financial planners, private bankers, all legally require professional indemnity insurance to ensure that they are protected and are not bankrupted by any legal action caused by their advice.

As professional indemnity claims may arise from any situation where a client loses money as a result of a professional mistake, professional indemnity insurance is also recommended to a whole number of other industries. Architects, engineers, graphic designers or anyone that takes a fee for service and delivers a product that a client relies upon is a candidate for professional indemnity insurance.

Professional indemnity insurance basically insures you against your skill. Some clients may have made a financial loss from your services to them. Professional indemnity insurance covers you for any legal costs that may arise from the client filing a lawsuit against you. You are also covered for any potential compensation in the event of losing the lawsuit.

You need it if you provide a professional service involving specialised knowledge or expertise. This includes:

• Advice
• Design
• Consultancy
• Opinion or
• Analysis services

As a result of growing consumer awareness, clients who rely on your professional services may pursue a claim if they hold you responsible for their loss.

Claims can arise against you in a number of ways:

• At common law in negligence if you fail to exercise the standard of reasonable care for your profession,
• For defamation,
• Under the misleading or deceptive conduct provisions of the Trade Practices Act,
• For breach of a contract to perform professional services.