Professional indemnity insurance for Australian businesses and professionals
Professional advice, services or representations can be challenged even when work is performed in good faith. RMA Insurance Brokers helps businesses review professional liability exposures and arrange insurance around the services they provide.
Support for professionals arranging, reviewing and claiming under professional indemnity cover.
Overview
Professional indemnity insurance overview
Professional indemnity insurance is designed to respond to certain claims arising from professional services provided by a business or professional.
Its primary purpose is generally to provide cover for civil liability arising from those professional services. This most commonly involves an alleged breach of professional duty, but depending on the policy it can extend to other claims such as breach of confidentiality or defamation.
Professional indemnity policies are commonly written on a claims-made basis, so the timing of a claim, notification and the professional work involved can be important.
Who it suits
Who should consider professional indemnity insurance?
Professional indemnity insurance is relevant to businesses and individuals whose clients rely on their professional knowledge, advice or services.
- Consultants and professional advisers
- Accountants and financial-services professionals
- Property professionals, valuers and Livestock & Property Agents
- Architects, engineers and design professionals
- Technology and digital consultants
- Other specialist service businesses
Professional indemnity insurance may also be required by legislation, a regulator, professional registration arrangements, a professional body or a client contract. Requirements vary by occupation and jurisdiction.
For Livestock & Property Agents, our Insight on professional indemnity versus public liability explains why the two policies address different types of allegations. rma network Members can also review the Network professional indemnity page for Livestock & Property Agents.
Cover
What cover may be available?
Professional indemnity policies vary between insurers and professions. The professional services insured, limits arranged and conditions shown in the policy schedule determine how the insurance applies.
The areas below are commonly considered when professional indemnity insurance is reviewed, subject to the insurer and the policy wording.
Professional negligence
Cover may respond to claims alleging negligence in the provision of professional advice or services. The claim does not necessarily need to establish that the professional deliberately did anything wrong.
An alleged failure to exercise the expected standard of professional care may be enough to create a claim requiring defence.
Errors & omissions
Professional work can involve mistakes, omissions or information that later proves incomplete or incorrect.
Depending on the policy, professional indemnity may respond where an act, error or omission in professional services is alleged to have caused financial loss to a client or another party.
Misstatements & breach of professional duty
A client may allege that advice, representations or professional information were inaccurate, misleading or failed to meet the professional duty owed.
Depending on the wording, civil liability arising from professional services may also extend to matters such as breach of confidentiality, defamation, loss of documents or infringement of intellectual property.
Defence costs
Professional claims can require legal representation even where the allegation is ultimately unsuccessful.
Depending on the wording, the policy may pay eligible costs incurred defending a claim covered by the insurance.
Depending on the wording, defence costs may be within the policy limit or payable in addition to it. Where costs fall within the limit, they can reduce the amount remaining for an insured settlement or damages.
Professional indemnity policies generally require the insurer's consent before an insured admits liability, agrees a settlement or incurs claim-related legal costs. Acting without the required consent may affect the cover available.
Regulatory inquiry costs
Professional conduct can also become the subject of a regulator, registration body or other formal inquiry.
Some professional indemnity policies may cover eligible costs associated with responding to or defending certain inquiries into the insured's professional conduct.
Selected policy extensions
Professional indemnity wordings can contain additional extensions depending on the insurer and profession. These may include matters such as dishonesty by employees, defamation, loss of documents, privacy or confidentiality issues and certain investigation costs.
These extensions should not be assumed to apply. Their availability, limits and exclusions vary between policies.
Professional indemnity cover may extend to the business's liability for professional work performed by contractors or consultants engaged on its behalf. The contractor or consultant is not usually insured in their own right under that policy unless separately arranged.
Timing
Claims-made and notified: timing matters
Professional indemnity insurance is commonly written on a claims-made and notified basis. This is different from many property or motor policies.
In broad terms, the relevant professional indemnity policy is generally the policy in force when a claim is first made against the insured and notified to the insurer, subject to the wording.
That means three dates can become particularly important:
when the underlying professional work occurred
when the insured first became aware of a claim or circumstance that might lead to a claim
when the matter was notified to the insurer
If you become aware of facts that might give rise to a claim, notifying the insurer in writing as soon as reasonably practicable and before the policy expires can be important. Under Australian law, timely written notification of those facts may preserve cover for a claim made later, subject to the applicable circumstances.
A policy may also contain a retroactive date. Acts, errors or omissions occurring before an applicable retroactive date may fall outside the available cover, even where the wider engagement continued afterwards.
Some policies also contain a specific continuous-cover provision with its own conditions. This is different from simply maintaining uninterrupted professional indemnity insurance from year to year.
This is why continuity of professional indemnity cover can matter even where a business changes insurer, stops providing a particular service, is sold or ceases trading.
Our guide to run-off cover when buying or selling a business explains why historical professional work may still need protection after ownership or operations change.
Professional services
Your professional services need to be described accurately
Professional indemnity insurance is arranged around the professional services disclosed to the insurer, so areas worth considering include:
advice and professional services provided
new or materially changed services
reports, valuations or professional representations
employees, contractors and consultants involved
overseas services or clients
changes to the entity, ownership or business structure
RMA Insurance Brokers helps review whether the activities shown on the policy still reflect how the business operates today.
Boundaries
Where other insurance applies
Professional indemnity generally addresses claims arising from professional advice, services or conduct. Public and products Liability Insurance generally addresses third-party personal injury and property damage arising from broader business activities or products.
Some professional indemnity wordings may also respond to bodily injury or property damage where it arises directly from the professional service itself, while others exclude it. The exact position depends on the policy wording.
Professional indemnity cover for privacy or confidentiality issues is generally concerned with liability arising from the professional service. Broader cyber-incident response, data-breach notification, system restoration and other cyber costs are generally considered under Cyber Insurance.
Information
What information may be needed for a review?
When reviewing professional indemnity insurance, we usually look at:
profession and professional services
annual revenue or professional fees
professional staff, qualifications and registrations
major client types and larger engagements
contractors, consultants and overseas work
current limits, excess, retroactive date and claims or circumstance history
Different professions can require considerably different underwriting information.
Limits
What may not be covered?
Not every loss or circumstance will be covered under a professional indemnity policy. Exclusions, limits, excesses and conditions differ between insurers, so some areas are worth checking carefully when reviewing your cover:
- known claims or circumstances existing before the relevant policy period
- acts, errors or omissions occurring before an applicable retroactive date
- liabilities assumed under contract beyond the liability otherwise owed
- amounts owed to the business for unpaid invoices
- refunds or waivers of professional fees, or the cost of correcting or redoing the insured's own work, where excluded by the policy
- deliberate fraudulent, criminal or dishonest conduct, noting that some policies preserve cover for other insureds who were not involved
- fines, penalties, criminal liabilities and other matters excluded by the relevant wording
Pollution-related liability is treated differently between professional indemnity wordings. Some policies may provide cover where pollution results from negligent professional advice, design or specification.
This is not a complete list.
The relevant policy wording, schedule, endorsements and circumstances of the claim determine how the insurance responds.
When should professional indemnity insurance be reviewed?
A review is particularly worthwhile when a business has:
- introduced new professional services
- materially changed how advice or services are delivered, including the adoption of new technology or AI tools
- taken on larger clients or contracts
- increased professional fees or revenue
- begun operating in another jurisdiction
- increased its use of contractors or consultants
- changed legal entities, ownership or business structure
- become aware of a complaint, claim or circumstance that may require notification
Annual renewal is also an opportunity to confirm that the professional-services description, retroactive date, limit, insured entities and claims history remain accurate.
Broker support
Professional indemnity support built around your services
Professional indemnity insurance varies materially between insurers, particularly around the professions and services insured, claims-made wordings, retroactive dates, limits, defence-cost treatment and available extensions.
We help clients understand the information insurers require, compare available policy structures and arrange cover relevant to the professional services genuinely provided.
RMA Insurance Brokers works with professionals and businesses across rural, regional and metropolitan Australia. Through our relationship with rma network Livestock & Property Agents, we have connections throughout regional Australia. We also support clients outside the rma network and across other parts of Australia.
How we help
How we help professionals
review the professional services being provided
confirm insured entities and relevant business structures
consider limits, excesses and defence-cost treatment
review contractual insurance requirements
consider retroactive dates and continuity of cover
compare available policy wordings and assist with notifications and claims
Our focus is on understanding the professional work being performed and helping arrange insurance that reflects that work.
What happens after you enquire?
We contact you
A broker from RMA Insurance Brokers will get in touch to understand the professional services being provided, the insurance currently in place and what prompted the review.
We confirm what is needed
We will explain what information is needed, answer your questions and confirm the next step before approaching insurers.
Useful information to have available
- current professional indemnity policy, if applicable
- professional services provided
- annual revenue or professional fees
- professional staff, qualifications and registrations
- client contracts or insurance requirements
- claims or circumstance history
FAQs
Frequently asked questions
What does professional indemnity insurance cover?
Professional indemnity insurance may cover certain claims alleging negligence, errors, omissions, negligent misstatements or breaches of professional duty arising from professional advice or services.
Depending on the policy, it may also cover eligible defence costs, investigation or inquiry costs and selected extensions.
Is professional indemnity insurance mandatory?
It is mandatory or required under some professional, licensing or regulatory arrangements, while other businesses may be required to hold it under a client contract or professional-body requirement.
Requirements depend on the profession and jurisdiction and should be checked for the particular business.
What is the difference between professional indemnity and public liability?
Professional indemnity generally concerns allegations arising from professional advice, services or conduct.
Public liability generally concerns third-party personal injury or property damage arising from business activities.
Some professional indemnity wordings may also extend to injury or property damage arising directly from professional services. This varies between insurers and policy wordings.
A business may need both because they address different exposures.
What does claims-made and notified mean?
A claims-made and notified policy generally requires a claim to be first made against the insured and notified to the insurer during the applicable period of insurance, subject to the policy wording.
The timing of a circumstance, claim and notification can therefore be important.
How much professional indemnity cover do I need?
There is no single limit suitable for every business.
The appropriate limit may depend on the profession, size of engagements, potential client losses, regulatory or professional requirements and contractual obligations.
Whether defence costs are payable within or in addition to the limit can also influence the level of cover considered.
RMA Insurance Brokers helps review the required limit against the business and available insurance market.
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Review your professional indemnity insurance
Professional services, clients and contractual requirements change over time.
RMA Insurance Brokers helps professionals review whether their professional indemnity insurance still reflects the services they provide today.
The information on this page is general information only and does not take into account your objectives, financial situation or needs. Cover is subject to the terms, conditions, limits and exclusions of the relevant policy. Insurance products and available cover vary between insurers. Please review the relevant policy documentation and obtain advice appropriate to your circumstances before making a decision.