That's tough to say. It'll depend on a few different factors including the type of work you do, your annual revenue, and the level of cover you'd like.
In 2021, we requested three different quotes from five different insurers, to get a picture of how much professional indemnity insurance might cost for a self-employed tax agent with $150,000 annual revenue. Here's what we found:
| Brand | Cost for $250,000 cover | Cost for $500,00 cover | Cost for $1,000,000 cover | Excess payable on claims |
|---|---|---|---|---|
| AIG | $644.38 | $649.05 | $994.35 | $1,000 |
| Berkley | $361.21 | $361.21 | $691.92 | $0 |
| DUAL | $479.31 | $479.31 | $644.44 | $1,000 |
| QBE | $327.75 | $415.24 | $619.38 | $1,000 |
| Vero | $389.20 | $411.07 | $498.57 | $0 |
| Average | $440.37 | $463.18 | $689.78 | $600 |
Data was taken from our quoting engine.
Professional indemnity is designed to protect you and your business if you ever make a mistake at work and the client sues. It'll also protect you if you didn't make the mistake, but you have an unhappy client who claims you did. But it won't protect against everything.
Professional indemnity insurance isn't one-size-fits-all. Lots of different factors are taken into account when calculating the price you pay. They include:
In some cases, yes.
Even if you don't technically need professional indemnity insurance, it's still a good idea to consider it.
No matter how careful you are, there is always the risk of error. Further, illegitimate claims can also end up costing you a lot of money, not to mention your reputation.
Professional indemnity insurance ensures your business can continue to operate despite having to cover legal costs.
Here are some real life examples of professional indemnity insurance claims:
An accountant advised their client that an expense was tax-deductible. The ATO investigated the claim and fined the client. The accountant was liable to pay legal fees to defend the claim and pay compensation to the client. Having professional indemnity insurance ensured those costs were covered.
A building inspector completed a pre-purchase report for a client buying a new house. It was later found that there was significant structural damage in the roof that was not identified in the report. The client sued the building inspector for damages. The building inspector's expenses were covered by their PI insurance policy.
An event coordinator double-booked a room at a function centre, resulting in the cancellation of one of the events. The client whose event was cancelled made a claim seeking damages for lost business and to recoup expenses. The events coordinator was able to cover these costs because they had a PI policy in place.
We understand that price is important - but it shouldn't be the only factor you look at when choosing professional indemnity insurance. Keep an eye out for insurers that:
It is important to get a number of quotes and talk to a variety of insurers before committing to any particular policy.
When looking for professional indemnity insurance, you'll come across some terms you might not have heard of before. We've cleared them up for you here.
| Term | What it means |
|---|---|
| Claims made | If you switch insurers after the event occurs, but the claim is made under a new insurer, the new insurer must handle the claim. |
| Run-off cover | Run off cover extends the policy after you have stopped trading. For example, if someone makes a claim after you've sold your business or retired. |
| Fidelity insurance | An additional cover that protects you against dishonest acts by employees. It can be taken out as a separate policy or included as an extension. |
| Policy retroactive date | The date from which your professional indemnity insurer will cover you. Typically, the retroactive date will either be unlimited or specified. An unlimited retroactive date means the insurer will cover claims regardless of when they occurred. A specific retroactive date will only offer cover after a specific date. |
| Cost inclusive | Legal defence costs are included in the maximum amount your insurer will pay for a claim. |
| Cost exclusive | Legal defence costs are covered in addition to the limit of indemnity, which means it could be a more desirable option. |
Professional indemnity insurance is complicated. Fill out the form below, to receive free advice from a broker.
Want protection against liability and negligence claims? Find out why these two forms of cover are essential for many businesses.
Wanting to find out about professional indemnity insurance for a midwife doing pre and postnatal care like a doula. Not doing births
Hi Jenny,
Thanks for reaching out. Professional indemnity cover is an important consideration for doulas. You could start by completing the broker form near the end of this article to get more information on your specific needs.
Best wishes,
James
How much does business insurance usually cost?
Hi Adam,
Thanks for leaving a question on finder.
As with most types of protective insurance, the cost for cover to be taken out can vary dramatically depending on the insured’s cover needs. In the case of professional indemnity insurance, this will depend on whether the policy is for a sole trader or for a business looking to provide cover for a significant number of employees. While sole traders may be able to get adequate cover for just a few hundred dollars, the cost of insuring a multinational company could run into the hundreds of thousands of dollars. Key factors that impact what you pay include:
– Number of staff employed by company and annual turnover. Sole traders or companies with say 15 employees won’t require the same level of cover as large-scale organisation.
– Types of clients that company/professional services. Professionals that work on large-scale,. multi-million dollar projects will require a higher level of cover than smaller firms.
– Industry. The nature of the service provided and the level of risk for claims being made will impact how much is paid for cover.
Policy inclusions and exclusions. Obviously more comprehensive protection packages with increased levels of cover will cost more than more basic policies.
– The cost of professional indemnity insurance is largely based on the percentage of your companies total legal spend and the likelihood of the company being taken to court. The insurer that you go with and the policy that you choose will also play a major role in the final cost of cover.
To get a professional, personalized advice about business insurance, I suggest you fill out the form above to speak to an insurance broker.
Cheers,
Joel
Regarding aged care and disability services, are cheaper premium payments possible under professional indemnity insurance if regular employee training is provided to staff?
Hi Christina,
Thanks for your inquiry.
Usually, if regular employee training is provided to the staff there is a possibility of lowering the premiums. In order to confirm this, you may have to contact your insurer.
Hope this information helped.
Cheers,
Arnold
I am establishing an online business that sells parenting resources and ebooks. I don’t have any qualifications as such but have developed my resources based on experience. Do I need professional indemnity insurance and/or products liability insurance?
thanks
Hello Allie,
Thank you for your inquiry.
As of the moment, recommending which cover to take is within the scope of a licensed insurance broker. You can leave your details on the “Enquiry Now” form so that you will be interviewed and assessed to know which type of covers suits your needs.
Hope this helps.
Cheers,
Jonathan
Can I cancel my policy if I wish at any time? And is there any cancellation fee prior to the termination date of a professional indemnity insurance?
Hi Laura,
Thanks for your question. finder.com.au is a comparison service and we are not permitted to provide our users with personalised financial advice. Generally, you are entitled to cancel your policy as soon as your insurer receives a written request from you to cancel the policy. Whether or not there is a cancellation fee will depend on your insurer, as there may be an administration fee applicable.
I hope this was helpful,
Richard