Professional Indemnity & Public Liability

Professional Indemnity & Public Liability Insurance

Professional businesses can face liability claims even when they believe they have done nothing wrong. An allegation of incorrect advice, professional negligence, an error or omission can result in substantial legal costs and potentially significant financial loss.

At the same time, businesses can face very different claims involving personal injury or damage to third-party property. This is why Professional Indemnity and Public Liability are different covers and why many professional and consulting businesses require both.

Insurance 2U arranges Professional Indemnity and Public & Products Liability Insurance for a broad range of Australian professionals, consultants and businesses. We take the time to understand the professional services provided, qualifications, experience, turnover, contracts, clients, projects and potential exposures before approaching insurers.

Professional Indemnity — Protecting the Advice & Professional Services You Provide

Professional Indemnity Insurance is designed to provide protection, subject to the individual policy wording, for certain claims arising from the provision of professional advice or services.

A client does not necessarily need to prove that you deliberately did something wrong before a serious problem develops. An allegation that your advice, design, representation or professional service caused financial loss can be enough to require a response and potentially incur substantial defence costs.

Depending on the policy and circumstances, Professional Indemnity claims can involve allegations such as:

• Professional negligence
• Errors or omissions
• Incorrect or inadequate professional advice
• Failure to perform professional services
• Design errors
• Misrepresentation
• Breach of professional duty
• Failure to disclose relevant professional information
• Incorrect reports, calculations or recommendations
• Failure to meet agreed professional obligations
• Other civil liability arising from professional services, where covered by the policy

Professionals & Consultants We Can Assist

Professional Indemnity is relevant across a very broad range of occupations. Insurance 2U has experience arranging insurance for professional and consulting businesses, including areas such as:

• Real Estate Agents & Real Estate Agencies
• Civil Engineers
• Business Consultants
• Management Consultants
• Project Managers
• Property Consultants
• Buyers Agents and other property professionals
• Building and Construction Consultants
• Design Consultants
• IT Consultants
• Technology Businesses
• Marketing and Digital Consultants
• Recruitment and HR Consultants
• Accountants and Bookkeepers
• Training and Education Consultants
• Risk and Compliance Consultants
• Other professional service businesses

Different professions present very different exposures. A real estate agency does not have the same Professional Indemnity risk as a civil engineer, and an engineer does not have the same exposure as a management consultant.

Understanding exactly what the professional does is critical to presenting the risk correctly to insurers.

Professional Indemnity for Real Estate Agents & Agencies

Real estate agencies can face allegations arising from property management, sales, leasing and other professional activities.

Depending on the circumstances, allegations may involve matters such as:

• Incorrect or misleading information
• Alleged failure to disclose information
• Property management errors or omissions
• Rental and tenancy-related professional services
• Advertising or representations made in connection with property
• Failure to follow client instructions
• Documentation and administrative errors
• Alleged breach of professional duty

For a real estate agency, we want to understand the complete activities of the business — including property management, residential and commercial sales, leasing, project marketing or off-the-plan activities and any other professional services provided.

Professional Indemnity for Civil Engineers & Technical Consultants

Civil engineers and technical consultants can have potentially significant professional exposures because their advice, calculations, designs, specifications and reports can influence major projects.

Depending on the professional services provided, exposures may arise from allegations involving:

• Design errors
• Incorrect calculations
• Specifications
• Professional reports
• Project advice
• Certification or inspection activities
• Failure to identify an issue
• Professional recommendations
• Project delays allegedly arising from professional services

Insurers can pay particular attention to the types and values of projects undertaken, professional qualifications, experience, subcontracted design work, contractual obligations and the proportion of work performed in higher-risk areas.

Professional Indemnity for Business & Management Consultants

Business consultants can provide advice affecting strategy, operations, management, systems, marketing, finance, technology and other important business decisions.

If a client alleges that professional advice or recommendations caused them a financial loss, the consultant may need to defend the allegation even where they strongly disagree with the claim.

We therefore want to understand exactly what consultancy services are provided rather than simply describing the occupation as “Business Consultant”.

Defence Costs — A Claim Doesn’t Have to Be Valid to Cost Money

One of the important features of Professional Indemnity Insurance is the potential protection for covered legal and defence costs.

A professional may believe an allegation is completely without merit. That does not necessarily prevent the business from incurring significant costs responding to and defending the matter.

Depending on the policy wording and circumstances, Professional Indemnity Insurance can provide cover for defence costs and covered settlements, compensation or damages.

The way defence costs interact with the policy limit can vary between insurers, which is another reason policy wording matters.

Professional Indemnity Is Generally Claims-Made Insurance

This is one of the most important differences between Professional Indemnity and many other forms of general insurance.

Professional Indemnity policies are generally written on a claims-made and notified basis. This means that when a claim is made, when circumstances become known and when they are notified to the insurer can be extremely important.

If you become aware of a complaint, allegation, demand or circumstance that could potentially result in a Professional Indemnity claim, contact us promptly.

Do not assume that waiting until legal proceedings commence is necessarily appropriate.

What Is a Retroactive Date?

A Professional Indemnity policy may contain a retroactive date.

In general terms, the retroactive date can affect how far back the policy will respond to professional acts, errors or omissions, subject to the complete policy wording and all other terms and conditions.

Some policies may provide unlimited retroactive cover, while others may specify a particular date.

Maintaining continuity of Professional Indemnity Insurance can therefore be particularly important. Changing insurers or allowing a policy to lapse should not be treated casually without considering the implications for prior professional work.

Run-Off Cover — What Happens When You Stop Practising?

Stopping work does not necessarily mean your Professional Indemnity exposure immediately disappears.

A claim may be made years after the professional service was originally provided.

Run-off cover is designed to maintain Professional Indemnity protection for certain claims arising from professional services provided before the business ceased, subject to the policy terms and the period of run-off insurance maintained.

This can become relevant when:

• A professional retires
• A business ceases trading
• A company is sold
• A partnership is dissolved
• A professional changes career
• A practice merges with another business
• A professional entity is wound up or restructured

The appropriate run-off period depends on the profession, contractual obligations, regulatory requirements and individual circumstances.

Closing the doors does not necessarily close the liability exposure. Professional Indemnity run-off should therefore be considered before cancelling cover.

Known Circumstances — Tell Us Early

A Professional Indemnity claim often begins with something much smaller than formal court proceedings.

It could start with:

• A dissatisfied client’s email
• A complaint
• A demand for compensation
• A client questioning professional work
• An allegation that advice was incorrect
• A threat of legal action
• A request to rectify an alleged error
• Another circumstance that could reasonably develop into a claim

If something occurs that could potentially result in a Professional Indemnity claim, contact Insurance 2U promptly so we can help determine the appropriate next step and notification requirements.

Public & Products Liability — A Different Exposure

Public Liability generally addresses a different category of risk from Professional Indemnity.

It can provide protection, subject to the policy wording, for the insured’s legal liability arising from certain third-party personal injury or property damage connected with the business activities.

Examples of exposures can include:

• A customer or visitor injured at the business premises
• Damage to a client’s property while performing work
• Accidents occurring at a job site
• Activities of employees away from the premises
• Damage caused during business operations
• Products causing personal injury or property damage
• Contractor and subcontractor exposures

Why Many Professional Businesses Need Both PI & Public Liability

Consider a consulting business attending a client’s premises.

If the consultant provides incorrect professional advice that allegedly causes the client a financial loss, that may create a Professional Indemnity exposure.

If the consultant accidentally damages the client’s property or someone is injured because of the consultant’s business activities, that may create a Public Liability exposure.

Same business. Completely different type of claim.

This is why we consider the activities of the business rather than assuming one liability policy covers everything.

Products Liability

Businesses that manufacture, import, distribute or sell products can also have Products Liability exposures.

We may need to understand:

• The products manufactured or sold
• Whether products are imported
• Country of manufacture
• Australian certification or compliance where applicable
• Whether products are exported
• Sales into overseas jurisdictions
• USA and Canadian exposures
• Annual turnover generated by the products

Liability Limits & Contractual Requirements

Public Liability limits commonly include $5 million, $10 million and $20 million, although other limits may be available.

The appropriate limit can depend on the business exposure and contractual requirements imposed by landlords, principal contractors, government entities or major clients.

Professional Indemnity limits similarly need to take account of the profession, size of contracts, potential severity of a claim and client requirements.

Claims Management & Advocacy — Where Experience Matters

Professional Indemnity and liability claims can become complicated very quickly.

Unlike a simple property damage claim, there may be allegations, lawyers, investigators, experts, lengthy correspondence and complex questions about liability and policy coverage.

Insurance 2U has experience assisting clients with Professional Indemnity and Public Liability claims and remains involved throughout the insurance claims process.

For clients whose insurance we manage, our claims assistance can include:

• Helping identify when a claim or circumstance should be notified
• Assisting with preparation and lodgement of the notification
• Collating relevant correspondence and supporting documentation
• Communicating with insurers, underwriters and claims personnel
• Following up insurer responses
• Helping explain information requested by insurers
• Assisting with communication where lawyers, investigators or experts become involved
• Monitoring outstanding insurer decisions
• Helping our client understand developments throughout the claim
• Escalating unreasonable delays where appropriate
• Assisting with disputed coverage matters where required
• Advocating for our client’s interests throughout the claims process

Early notification matters. If you receive a letter of demand, complaint, allegation or become aware of circumstances that could potentially result in a claim, contact us before making admissions, negotiating a settlement or attempting to resolve the matter yourself.

The Insurer Has Claims Professionals — So Should You

When a significant liability claim occurs, the insurer may appoint experienced claims personnel, lawyers, investigators and other specialists to manage the matter.

Our role as your insurance broker is different. We are there to help our client understand the insurance process, communicate with the insurer and advocate for our client’s interests throughout the claim.

That hands-on claims service is an important part of the way Insurance 2U looks after its clients.

Access to Professional Indemnity & Liability Markets

Insurance 2U has access to major Australian insurers, specialist underwriting agencies and Lloyd’s markets for Professional Indemnity and Public & Products Liability risks.

Insurer appetite can vary considerably according to:

• Profession and business activities
• Annual turnover
• Professional qualifications and experience
• Largest contract and project values
• Contractual liabilities
• Claims and circumstances history
• USA and Canadian exposures
• Overseas work
• Subcontracted professional services
• Required limits of indemnity

Our role is to understand the professional risk, approach appropriate insurance markets and help our client understand the terms available.

Why Insurance 2U for Professional Indemnity & Public Liability?

• Professional risk experience: We understand the different exposures faced by real estate agents, civil engineers, consultants and other professional businesses.
• PI knowledge: We understand claims-made policies, retroactive dates, circumstances and the importance of continuity of cover.
• Run-off awareness: We can assist clients considering retirement, sale, closure or restructuring of a professional business.
• Broad market access: Access to major insurers, specialist underwriting agencies and professional risk markets.
• Claims experience: We have experience assisting clients with Professional Indemnity and Public Liability claims.
• Claims management: We help notify, manage, follow up and escalate claims where appropriate.
• Claims advocacy: We advocate for our client’s interests throughout the insurance claims process.
• Personal service: We take the time to understand what our client’s professional business actually does.

Talk to Insurance 2U About Your Professional & Liability Risks

Whether you are a real estate agency, civil engineering firm, business consultant, property professional, technology company or other professional services business, talk to Insurance 2U about your Professional Indemnity and Public Liability requirements.

Professional Indemnity & Public Liability Insurance — specialist advice, professional risk knowledge and experienced claims advocacy when your reputation and business are on the line.