When it comes to considering their insurance requirements, a lot of tradies assume the professional indemnity insurance won’t apply to them. However, there are certain circumstances where tradies will need to consider having indemnity insurance in place. Today, we’ll be taking a closer look at what professional indemnity insurance covers.
What is professional indemnity insurance?
Professional indemnity insurance is designed for individuals who provide professional advice or services as part of their job. It provides financial protection against claims from a third party following financial loss due to a breach of profession duty or negligence resulting from an act, error or omission. It not only covers the costs associated with a claim but also legal bills involved with the process.
While it’s true that this form of cover won’t apply to many tradies, if you provide advice for a fee then you need to consider cover. For example, if you’re an electrician providing specifications around electrical work then you need to consider having cover in place. It may also apply to tradies working in construction who are giving advice around design.
Why is professional indemnity insurance important?
If you provide advice for a fee on a regular basis as part of your business, professional indemnity insurance gives you peace of mind that you’ll be protected financially in the event of an indemnity claim. Professional indemnity insurance not only protects against the costs associated with investigating, defending and settling a claim, but also covers the cost of hiring a public relations expert so you can protect your reputation if necessary. In some cases, you also have a condition attached to your contract to have indemnity insurance in place.
What does professional indemnity insurance cover?
Just some of the scenarios that professional indemnity insurance can protect against include:
Breach of contract
Indemnity claims can occur when there has been an alleged breach of contract. An example could be that your construction business agreed via contract to have a project completed by a certain date and this has not occurred.
Loss of documentation or data
As part of your work, tradies often have possession of client documentation or data which has the potential to be lost or stolen. If this resulted in a loss for the client, this can result in an indemnity claim.
Defamation or libel
Defamation or libel can be common causes for indemnity claims. If you harm a third party’s reputation through spoken or written word and the claims you make are found to be false, you could find yourself on the receiving end of claim.
If you go significantly over budget on a project, a third party could claim that this is due to negligence on your behalf which could result in an indemnity claim. Even if the revised budget is justified, you may need legal assistance to fight the claims.
Actions of employees
Professional indemnity insurance doesn’t just cover you – it also covers the actions of your employees. If the actions of an employee are found to be negligent, they’ll be covered by your indemnity insurance.
As with every form of cover, there will also be exclusions attached to your policy. Make sure you read the fine print of your policy so you understand what’s covered and what’s not covered.
What doesn’t my professional indemnity insurance cover?
It’s important to remember that your professional liability insurance won’t protect against injury or damage to third party property – this is different to an indemnity claim and is covered through your public liability cover.
At All Trades Cover, we specialise in providing easy and convenient insurance cover for tradies. We’re partnered with the world’s largest insurance marketplaces to provide the best price, as well as policies which cater specifically to the needs of tradies. We understand the specific needs of your industry and ensure that your risks are covered for ongoing peace of mind. If you’re not sure what cover should be included in your insurance package, speak with one of our brokers today.
For more information about professional indemnity insurance, contact All Trades Cover today on 1300 826 850.