Professional Indemnity Insurance Explained

Professional Indemnity (PI) insurance protects you when a client claims that your professional advice, service, or expertise caused them financial loss. It covers your legal defence costs and any damages awarded — even if the claim has no merit.

Who needs PI insurance?

• •Management consultants and business advisers: If a client claims your strategy cost them revenue, you're exposed.
• •IT professionals and developers: A system failure or data breach traced to your code can generate a significant claim.
• •Designers and architects: Design errors that result in construction issues or brand damage are classic PI claims.
• •Financial advisers: Required by ASIC for licensed advisers.
• •Accountants and lawyers: Required by professional associations; exposure is high.
• •Healthcare professionals: Medical indemnity is a specific form of PI.

Key features to check

• •Retroactive date: PI policies are 'claims-made' — the policy in force when the claim is made (not when the work was done) responds. Retroactive cover protects you for past work.
• •Run-off cover: If you stop practising, you need run-off cover for claims that arise after you close — sometimes for years.
• •Defence costs: Check whether defence costs are inside or outside the limit. Outside is better — it means your full limit is available for damages, not eaten by legal fees.