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

LauraAugust 1, 2016

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?

Finder

RichardAugust 2, 2016Finder

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

ElleMarch 9, 2016

If I have Professional Indemnity Insurance but I work for a company, and a claim is made against me, would my employer be liable to pay any damages/compensation? And if so, does my insurance extend to cover them or do they need to have their own insurance?

Finder

RichardMarch 9, 2016Finder

Hi Elle,

Thanks for your question.

It will depend on what the claim is for and what your policy covers. It’s best to speak with your insurer directly on the claim and to know how to go through the process of a claim.

Alternatively, if you would like to speak with an advisor about your options, please enter your contact details into the form for professional indemnity insurance and a broker will be in touch.

I hope this was helpful,
Richard

sallyJune 20, 2015

need to know types of insurance to be taken out for businesses that will indemnify them and/or their employees

Finder

RichardJune 22, 2015Finder

Hi Sally,

Thanks for your question.

You may want to speak with an advisor about the specific needs of your company, please enter your details into the professional indemnity insurance contact form for free advice from a broker.

I hope this was helpful,
Richard

RachelJune 10, 2015

I am an Australian business coach who will be providing virtual services to US & Canadian clients. I understand that most Australian professional indemnity policies will not cover actions brought in these jurisdictions. What are my options?

Finder

RichardJune 11, 2015Finder

Hi Rachel,

Thanks for your question.

You may want to speak with an advisor about the specific needs of your company, please enter your details into the professional indemnity insurance contact form for free advice from a broker.

I hope this was helpful,
Richard

DellysMay 19, 2015

I have extensive experience and post grad qualifications in counselling but have always worked within an agency. Having recently retired and relocated to a rural WA town where there are limited services, I see/hear a lot of distress so I wish to open a solo practitioner counselling service. Is there a difference (insurance wise)if I provide a free service or charge for services?

Finder

RichardMay 20, 2015Finder

Hi Dellys,

Thanks for your question. Professional indemnity insurance protects you if you’re providing your customers with a service, in your case counselling. This applies even though you may have provided your services free of charge.

I hope this was helpful,
Richard

Professional Indemnity Insurance in Australia

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

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