Professional Indemnity Insurance for Psychologists

Professional indemnity insurance is compulsory for psychologists in Australia. Protect yourself and your livelihood with professional indemnity insurance.

Key takeaways

  • Professional indemnity insurance for psychologists is a legal requirement in Australia.
  • If you are accused of a negligent act, error or omission in your job, professional indemnity insurance can pay for legal and court costs, as well as any damages awarded.

Psychologist indemnity insurance: do I need it?

If you are a registered psychologist working in Australia, you need to have professional indemnity insurance in place that meets the Psychology Board's professional indemnity insurance registration standard. This means that you need professional indemnity insurance if you:

  • Are self-employed
  • Perform a combination of employed and self-employed roles
  • Work in an unpaid role
  • Volunteer

You won't need professional indemnity insurance if you are employed and your employer has cover in place. If you are a registered psychologist but you're not practising for a specific period of time, you don't need professional indemnity insurance. You also don't need it if you are registered in Australia but are practising overseas.

Finder survey: How often do Australians compare or switch their professional indemnity insurance?

Response
I never compare or switch29.51%
once every 3+ yrs26.23%
once a year22.95%
every 2 yrs16.39%
more than once a year4.92%
Source: Finder survey by Pure Profile of 1112 Australians, December 2023

What does professional indemnity insurance cover?

Psychologists can provide incorrect treatment to a patient, fail to provide adequate supervision, misdiagnose a behavioural problem or even breach a patient's privacy and share confidential information. This opens you open to being sued if you make an error, omission or breach of professional duty that results in a client suffering a loss.

This is where professional indemnity insurance comes in. It provides cover for court and legal defence costs and includes cover for any damages or compensation. Professional negligence lawsuits can be very costly to defend against, and without cover in place, you run the risk of ending up in a dire financial situation.

How much professional indemnity insurance cover should I have?

You need to have enough insurance coverage to pay for compensation if a successful claim is made against you. This specific amount that you will need then, depends on your specific circumstances and a number of factors such as:

  • The area that you work in
  • The services that you provide
  • The risks involved in your job

A broker will be able to work out how much insurance you need by asking you a series of questions about your role.

Other types of psychologist insurance to consider

There are several other types of insurance cover that psychologists should consider getting.

  • Public Liability Insurance. This is different from professional indemnity insurance because it protects you from damages related to the physical surroundings and property as opposed to the specific services you provide. For example, if a client slips and falls while at your office and they submit a claim against you, public liability can protect you.
  • Commercial property insurance. This covers you for repairs if your property and its contents are damaged by fire, theft or some other insured event.
  • Cyber liability. This protects you from claims made against you if you are the target of a cyber attack and your client's information is compromised.
  • Business interruption. If your business is unable to operate, business interruption can pay you for the losses incurred.

Find more types of business insurance

How to compare cover for psychologists

When you're looking for a professional indemnity insurance policy, there are a number of factors to consider. Shop around and find a policy that is suited to your insurance needs.

Research insurance providers

Look for a company with a trusted name and reputation, and preferably one that is backed by plenty of experience. You will need to decide whether you want to go with a general insurer or one who specialises in this field. There are certain insurance companies that specialise in professional indemnity insurance for certain occupations, so check to see if one of these providers may be able to offer the cover you need.

Take advantage of comparison sites to review specific policies

Use online comparisons sites to weigh up the pros and cons of a number of policies. This will involve looking at the features, benefits, limits and exclusions of competing professional indemnity plans to find the most suitable option. Investigate the limit of indemnity of each policy, a figure which is typically between $1 million and $20 million. Would this limit be enough to cover you in the event that you found yourself the subject of a costly lawsuit?

Check the level of cover for 'inquiry costs'

It's also a good idea to check the level of inquiry costs offered on each policy. The most common investigation psychologists face is a hearing at the Psychology Board of Australia. The costs incurred in such hearings is referred to by insurers as inquiry costs, but while some policies will offer cover equal to the limit of indemnity you have selected, other policies will offer a significantly lower limit. Be sure to pay attention to the fine print.

Other features to look for include free legal advice and run-off cover.

Find out more about professional indemnity insurance

Talk to a broker about professional indemnity insurance

Frequently asked questions

Gary Ross Hunter's headshot
Editor, Insurance

Gary Ross Hunter was an editor at Finder, specialising in insurance. He’s been writing about life, travel, home, car, pet and health insurance for over 6 years and regularly appears as an insurance expert in publications including The Sydney Morning Herald, The Guardian and news.com.au. Gary holds a Kaplan Tier 2 General Advice General Insurance certification which meets the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

Gary Ross's expertise
Gary Ross has written 645 Finder guides across topics including:
  • Health, home, life, car, pet and travel insurance
  • Managing the cost of living

More guides on Finder

  • Run-Off Insurance

    Want a professional indemnity insurance policy that also covers you for past projects and services? Find out more about run-off insurance.

  • Professional Indemnity Insurance for Physiotherapists

    Are you a practising physio or an owner of a clinic? Make sure you have professional indemnity cover.

  • Professional Indemnity Insurance for Travel Agents

    This guide looks at the exposures travel agents face and how PI Insurance protects them from claims of negligence, error or omission.

  • Professional indemnity insurance for lawyers

    Lawyers are often instrumental in pursuing claims for others, but ironically, they too can be sued for breaching their duty of care.

  • Professional Indemnity Insurance for Accountants

    Why do accountants need professional indemnity insurance? Why do they need public liability insurance? This article looks at the many risks that accountants are exposed to in the course of doing business and will hopefully convince every accountant who reads it that PI Insurance is not something they can afford to be without.

  • Cheap professional indemnity insurance

    Finding the right professional indemnity insurance policy for your business is an important task to make sure your company is protected.

  • Professional Indemnity Insurance for Nursing

    Nursing is a vital profession in hospitals and nursing homes around Australia, but the people who work as nurses are exposed to a unique range of risks. If a nurse were to make a mistake or an error of judgement — for example administer the wrong medication, fail to follow a doctor’s instructions or give incorrect advice to a patient — they could find themselves the subject of a lawsuit for a breach of their professional duty.

    This is where professional indemnity insurance shows its worth. This type of cover offers much-needed financial protection for nurses against claims of negligence or malpractice. It covers the cost of your legal defence as well as any compensation you may be legally required to pay to a third party. Public relations costs to repair your professional image are also covered by professional indemnity policies.

    In order to find the right professional indemnity insurance policy for you, compare policies at finder.com.au and seek advice from colleagues. Compare quotes from a number of insurers and seek help from an insurance consultant if required.

  • Public Liability Insurance and Professional Indemnity Insurance

    Want protection against liability and negligence claims? Find out why these two forms of cover are essential for many businesses.

Ask a question

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms Of Service and Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site