What does professional indemnity insurance cover?
Claims that your professional services caused someone a loss, including damages and defence costs. The wordings we read are claims made and notified, so the claim must be made and reported during the policy period.
- Source
- Professional indemnity policy wordings from two Australian insurers
- Updated
Professional Indemnity Insurance — What It Covers
Professional indemnity (PI) insurance covers civil liability and defence costs for claims arising from the professional services you provide. The wordings we read operate on a claims made and notified basis and include extensions such as continuous cover and court attendance costs, with exclusions for known prior circumstances, deliberate acts and most bodily injury.
Claims Made and Notified
PI wordings respond to claims that are first made against you and notified to the insurer during the policy period. What matters is when the claim is made and reported, not only when the work was done. Source: professional indemnity wording, introduction.
Core Cover
The wordings cover civil liability for damages and claimants' costs from claims arising from your provision of, or failure to provide, professional services. In one wording this expressly includes:
▹ Misleading or deceptive conduct under consumer and corporations law
▹ Defamation
▹ Infringement of intellectual property such as trade marks, designs and copyright
▹ Breach of privacy or confidentiality
▹ Matters connected with data or computer systems
Source: professional indemnity wordings, insuring clauses.
Defence Costs
Defence costs incurred by the insurer, or by you with its prior written consent, are covered. One wording advances defence costs as invoices arrive, but they must be repaid if it is later found you were not entitled to cover. Source: professional indemnity wording, defence costs clause.
Extensions
▹ Continuous cover: protects you if you knew of a circumstance before this policy but did not notify it, provided you have been continuously insured with the same insurer and the failure was not fraudulent. The lower of the old and new limits applies.
▹ Court attendance: one wording pays up to $500 per person per day, and $20,000 per claim, when you or staff must attend court for a covered claim.
▹ Run-off: one wording offers optional cover for up to 84 months after a merger, takeover or sale, for work done before it.
▹ Privacy breach costs: one wording offers optional cover for responding to a privacy breach, subject to a sub-limit.
Source: professional indemnity wordings, extensions.
Exclusions
▹ Circumstances you knew about before the policy started that might lead to a claim
▹ Deliberate or intentional acts
▹ Death or bodily injury, unless it results directly from your professional services
▹ Acting as a director or officer of a company
▹ Pollution and radioactive contamination
▹ Claims in certain restricted jurisdictions
▹ Cryptocurrencies and other digital assets
Source: professional indemnity wordings, exclusions sections.
Important Notes
PI wordings are often written for a particular profession, and limits, sub-limits and excesses differ between insurers and between retail and broker-arranged policies. Check the policy wording and schedule for your own policy, or ask your broker.
Factual information from the policy wordings cited above, at the date above. It is not personal advice, financial product advice or a recommendation, and cover depends on your policy, schedule and circumstances. PolicyAI can make mistakes: check the current Product Disclosure Statement (PDS) or ask your broker before relying on it. Spotted an error? Tell us. See our disclaimer.
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