How important is professional indemnity cover for careers consultants?
A few years ago, a professional was a doctor, lawyer or accountant. Nowadays the term is applied to virtually anyone who provides advice or services in a professional capacity. And along with a broadening of the definition has come a wider need for professional indemnity insurance. That's why even a careers consultants should consider professional indemnity insurance as there could be circumstances where they provide incorrect advice.
- Why do Careers Consultants Need Professional Indemnity Insurance?
- Tips on How to Compare Professional Indemnity Insurance for Careers Consultants
- Public Liability Cover for Careers Consultants?
How does indemnity insurance apply to the activities of a careers consultant?
As a careers consultant, you face risks that are specific to your industry and for this reason, you should seek professional indemnity insurance from a provider who specialises in covering such liabilities.
Careers consultants provide a range of different services to their clients including:
- Assessing personal characteristics and skills
- Advising clients on their career options based on these assessments
- Performing and interpreting psychometric and personality tests
- Producing action plans, reports and careers literature
- Counselling clients facing redundancy or work-related stress
- Advising clients on career changes and development paths.
In providing these services, careers consultants face the risk of a client suffering a financial loss as a result of their advice or actions. Key exposures faced by careers consultants include:
- Incorrect interpretation of psychometric and personality tests
- Incorrect assessment of personal characteristics and skills
- Failing to provide adequate advice regarding CVs, job search or interview techniques
- Failing to create or correctly implement career action plans
- Breaching client confidentiality
- Giving erroneous advice regarding career qualifications or educational requirements.
Guiding a persons career path can be hugely rewarding, but it is also a big responsibility and providing advice that damages a client’s career prospects can have serious consequences. Professional indemnity insurance gives careers consultants peace of mind, knowing that if they make a mistake (or even if they don’t), they are protected in the event of a lawsuit.
What's covered by professional indemnity?
Professional indemnity insurance not only covers your legal costs in defending the claim (of providing incorrect advice), but also any damages that might be awarded to a client who claims against you.
- Breaching confidentiality
- Conflict of interest
- Breach of contract
- Breaching consumer or fair trading laws
- Infringement of intellectual property
- Loss of documents
- Defamation or libel
- Employee dishonesty
How do I compare cover?
The first step
Compare a number of policies from different providers.
Then look at the following features
You should look for features such as the following:
- Industry specific cover. Cover that is specific to your industry and that focuses on the liabilities you are most likely to be exposed to in the course of carrying out your business
- Insurer with relevant claims history. An insurer who has a claims history related to your specific risks and who has a strong industry rating, which indicates their ability to pay
- Dedicated claims team. An insurer who will provide adequate support in the event of a claim being made and who will appoint a dedicated claims team to handle your case
- An excess that is cost-exclusive rather than cost-inclusive. I.e it will go towards the settlement of a claim, rather than towards legal costs)
- Clearly defined exclusions. So that you are aware of what you are not covered for.
- Several reinstatements of the limit of indemnity. In case you need to make more than one claim in a year
- Coverage that applies outside of Australia. If you deal with international clients
- Coverage for all those who provide advice or services on your behalf. This includes past, current and future principles, employees, agents and contractors
What about price?
You should also compare prices when selecting professional indemnity insurance, but this should not be your first or only consideration. It is more important to ensure you have cover that is specifically tailored to your needs than to save a few dollars now and face an expensive shortfall at a later date.
Public liability cover for careers consultants?
Given that you need professional indemnity insurance, you may ask why does a careers consultant also need public liability insurance? The answer is because, if you run a business of any kind and have dealings with the public, then you need public liability insurance.
It covers you in the event that a third party, whether it’s a client or anyone else you visits or who attends your premises, suffers an injury or property damage as a result of doing business with you.
Public liability claims can run into the millions of dollars, so not being covered could have dire consequences for a business. You will usually be offered it at the time of taking out professional indemnity insurance, so if you don’t have public liability cover, you would be well advised to include it.
It is generally not an expensive form of insurance and the cost will depend largely on the size and nature of your business, so shop around, just as you would when choosing any insurance cover.
Frequently asked questions about professional indemnity insurance for careers consultants
Q. I have never had a negligence claim brought against me. Why do I need professional indemnity insurance?
- A. Because one day you may face a claim, even if you are not at fault and you will have to defend that claim in court at your own expense
Q. How will professional indemnity insurance protect me?
- A. It will protect your assets, so that if a claim is brought against you, the insurance will pay the costs rather than you.
Q. How much cover do I need?
- A. A minimum of $1 million is normal. The average amount of cover is $5 million to $10 million.
Q. When should I notify of a situation that I think might result in a claim?
- A. As soon as possible, otherwise the claim may be denied due to a ‘known circumstance’.
Q. What is a known circumstance?
- A. A circumstance where you knew or, given your professional position, should have known, that a claim would result, prior to that claim being made.
Q. What is civil liability indemnity?
- A. This covers you for claims arising from strict liability where negligence is not involved.
Q. What does negligence mean?
- A. Negligence is where someone suffers a loss caused by your failure to fulfil your duty of care towards them.
Q. What is the retroactive date?
- A. The date from which you are covered for any alleged act, error or omission.
Q. Is it difficult to take out professional indemnity insurance?
- A. Not any more. These days you can often apply online and be covered within 24 hours.
Professional indemnity insurance for careers consultants
A careers consultant can literally make or break someone’s career. Providing them with the wrong advice or failing to adequately perform a service for them can result in their making the wrong career choice or failing to achieve their goals. That’s why careers consultants and anyone else who acts in a professional capacity on another’s behalf, needs the protection of professional indemnity insurance.