How does Professional Indemnity Work:
A Professional Indemnity Insurance policy is whats know as a “Claims Made” policy which is a policy that responds when a Claim is notified, not when the event happened. This makes it so important to continue to renew Professional Indemnity insurance each year.
For example a bookkeeper did work for a client in 2007, however it was not until 2010 that the ATO investigated their client for some discrepancies in their activity statements. The ATO and alleges that the bookkeeping has been prepared incorrectly. This is the time that potentially a Professional Indemnity claim may exist and this will be the date the claim is acknowledged, 2010, not when event happened in 2007. Not only does Professional Indemnity cover you for professional negligence, it also covers defence costs to defend any legal action bought against you and any costs associated with an official enquiry or investigation.
Policies can include the follow cover:
• Professional Negligence
• Wrongful Act
• Breaches of Legislation
• Fidelity (misappropriation of your money by staff member)
• Defence Costs in addition to sums insured
• Advancement of defence cost
• Libel/Slander/ Defamation
• Lost Documents
• Dishonesty and Fraudulent Activities of your employees/contractors
• Retroactive Cover-Covers you for all past work provided that you have had continuous Professional Indemnity insurance
• Run off cover ( extended reporting period ) after you sell the business or cease operations.
• Estates heirs and legal representative
• Former Principles, Employees and Contractors.
When considering buying Professional Indemnity insurance consult an Insurance Broker for advice as they have experience in arranging this type of insurance and are best placed to negotiate the cover you need at the most competitive price.
