Is professional indemnity insurance tax-deductible?

Yes, professional indemnity insurance premiums are generally tax-deductible for Australian businesses and sole traders as an operating expense incurred in earning assessable income.

What is the difference between professional indemnity and public liability?

Professional indemnity covers financial losses resulting from advice, services or designs you provide, whereas public liability covers third-party bodily injury or property damage arising from your general business operations.

How much professional indemnity cover do I need?

Most Australian professionals choose cover between $1 million and $10 million, depending on industry association requirements, contract mandates and potential exposure to client financial loss.

What is run-off cover and do I need it?

Run-off cover protects you against claims made after you close your business, change careers or retire, for work completed while the policy was active. Since claims can arise years after advice was given, run-off cover is crucial for long-term peace of mind.

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Compare at least three insurers to see how pricing and cover limits differ for your industry and business size
Check if your profession legally requires professional indemnity insurance before starting work or signing contracts
Consider policies with run-off cover to protect yourself from claims even after you stop trading or retire

How much does professional indemnity insurance cost?

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.

We put every effort into ensuring information on Finder is accurate. This article was reviewed by Justine McLean from our Editorial Review Board as part of our fact checking process.

In 2025, we requested three different quotes from six 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:

Insurer	Cost for $250,000 cover	Cost for $500,000 cover	Cost for $1,000,000 cover	Excess payable on claims
	$684.75	$742.50	$858.00	$1,000
	$511.50	$511.50	$546.15	$0
	$1,074.56	$1,135.20	$1,377.75	$0
	$430.65	$430.65	$511.50	$2,500
	$563.78	$695.52	$869.55	$1,000
	$736.73	$800.25	$896.12	$750
Average cost	$667.00	$719.27	$843.18	$875

Data was taken from our quoting engine in February 2025 based on a sole trader tax agent looking for $250,000 in professional indemnity insurance cover.

What's covered by professional indemnity

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.

Covered

Breach of duty. You fail to lodge a client's important paperwork in time.
Breach of privacy or confidentiality. You accidentally share a customer's personal information online.
Defamation, libel or slander. You publish something online which damages a person's reputation.
Intellectual property infringement. You accidentally breach copyright laws in a design you give to a client.
Legal fees. The legal costs of investigating, defending and settling claims.
Reputation repair. Public relations costs designed to repair your reputation if it's damaged.
Loss or damage to documents. A tax agency is severely damaged along with receipts given by clients.

Not Covered

Issues known prior to insurance. You receive a complaint from a customer then take out cover
Criminal conduct. You use your client's information to open a credit card.
Damage to property. You visit a client's home and accidentally break something.
Intentional acts. You use below-standard materials for a house you are working on.
Fraud and dishonesty. You claim to have qualifications that you do not.
Fines and penalties. If you are ordered to pay a fine, this is unlikely to be covered.
Bankruptcy. If your business goes bankrupt, your policy won't cover related claims.
Accidental injury. You construct a faulty wall which ends up collapsing on someone.

Key factors that will affect your quote

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:

Your industry. Some industries are higher risk than others, which will mean paying more for your insurance. For example, the risk of a financial planner giving bad advice is likely to be higher than that of an IT consultant.
Your turnover. The more money your business turns over, the more you'll likely have to pay for your insurance policy. This is because larger businesses typically handle larger, more valuable projects.
Your past claims history. If you've made claims on professional indemnity insurance in the past, insurers are likely to see you as a higher risk.
The size of your business. Larger businesses with more employees generally face higher risks simply due to the sheer volume of work being completed.
The limit of liability. The higher your limit of liability, the higher your premium will be.
Your excess. A higher excess will typically reduce your premium, while a lower excess will increase it.

How does professional indemnity work?

Professional indemnity works a little differently to other insurance policies, so it's a good idea to know how they work before you take out a policy.

Some important things to understand

Terms	Definition
Claims made	If you switch insurers after an incident occurs, your new insurer will only handle the claim if the event happened after your agreed retroactive date and was not a known circumstance prior to policy inception.
Run-off cover	Run off cover protects you from claims that are made after your business has ceased trading or you have retired. As long as the work was completed while the policy was active, you'll still be covered.
Retroactive date	This is the date from which your policy provides cover for past work. Any work done before this date won't be covered by your policy, even if the claim is made while the policy is active.

Who needs professional indemnity insurance?

If you provide advice, services or designs to clients, you should consider professional indemnity insurance. In Australia, it is mandatory for several professions, including:

Accountants and tax agents
Architects and building designers
Real estate agents
Financial planners and advisers
Lawyers and conveyancers
Medical professionals and allied health providers

Even if it isn't legally mandatory for your specific line of work, many clients and principal contractors will insist that you hold a minimum amount of professional indemnity cover before hiring you or entering into a contract.

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FAQs

Finder writers are subject matter experts and use primary sources, in-depth research and interviews with other experts to ensure you're getting accurate, up-to-date information. Articles are fact checked in line with our editorial guidelines.
1. Australian Taxation Office: Business deductions
2. Business.gov.au: Professional indemnity insurance

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Written by

Alex Reid

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Alex Reid is Finder’s business insurance cadet. He has a Master of Marketing from the University of Technology Sydney, with a background in business and sales. When not writing about business insurance for Finder he's a keen scuba diver, recently completed his 200th hour underwater and his PADI Divemaster certification. Before working at Finder he lived in Hangzhou China, where he studied Mandarin and Chinese culture. See full bio

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34 Responses

DavidAugust 5, 2025

Please email quotations for maximum of $100M Professional Indemnity Insurance products

Finder

AngusAugust 6, 2025Finder

Hi David, You can use the Get quote button on the page to access a broker and receive quotes – these will vary depending on your business so it’s not possible to give a general quote just based on a single value.

JennyMay 8, 2023

Wanting to find out about professional indemnity insurance for a midwife doing pre and postnatal care like a doula. Not doing births

Finder

JamesMay 10, 2023Finder

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

AdamJuly 17, 2018

How much does business insurance usually cost?

JoelJuly 17, 2018

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

ChristinaAugust 3, 2017

Regarding aged care and disability services, are cheaper premium payments possible under professional indemnity insurance if regular employee training is provided to staff?

ArnoldAugust 4, 2017

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

AllieJuly 18, 2017

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

JonathanAugust 1, 2017

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

Professional Indemnity Insurance in Australia

Protect your business from potential legal costs and claims with professional indemnity insurance.

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