Project Manager Professional Indemnity Insurance
Protect your reputation and your finances with professional indemnity insurance for project managers
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As a project manager, a great deal of responsibility rests on your shoulders. If you're accused of doing something wrong and are sued, professional indemnity insurance for project managers can help. It's designed to pay for legal fees and provide you with financial support to defend your reputation if you believe you've been wrongly accused.
If you're ready to look at policies, you can compare quotes below or pop in your details to speak to a broker.
Compare professional indemnity insurance
Project managers are subject to allegations including:
- Providing incorrect advice to a client
- Failing to manage a project
- Misinterpreting data or plans
- Deceptive or misleading conduct
- Employee fraud and dishonesty
Construction projectA typical example is a builder undertaking a construction project. The weather, unforeseen obstacles such as employment issues or supply chain problems and if it is a large-scale construction project could all delay a projects completion time, leaving the developer facing financial losses. Having professional indemnity insurance means the builder can pay his legal costs and any damages awarded to the developer.
What is professional indemnity insurance cover?
Professional indemnity insurance is a form of liability insurance designed to protect professionals who give advice or provide a service to their clients. If they fail to perform in this capacity as a professional and it results in a client suffering a financial loss, professional indemnity insurance will cover them in the event of a claim of negligence. It covers the legal costs of defending the claim as well as any damages that may be awarded to the client.
Who else takes out this type cover?
Professionals of all kinds take out professional indemnity insurance including doctors, lawyers, accountants, consultants, builders, architects, financial advisers, engineers and IT professionals. Any independent professional whose failure to perform could result in loss or injury to a client needs to consider this kind of cover.
Professional indemnity insurance covers a wide range of potential risks that project managers may be exposed to. These can include:
- Providing incorrect information and advice
- Breaching privacy and confidentiality rules
- Showing bias towards a particular party
- Having a conflict of interest
- Creating an ineffective strategy
- Failing to properly manage a project
- Failing to complete a project within an agreed time frame
- Breaching a client's confidentiality
- Losing important documents
- Failing to follow a client's instructions
- Unintentional defamation, slander or libel
- Breaching fair trading laws
- Breaching a contractual agreement
- Infringing on intellectual property rights.
As well as covering the costs associated with negligence, professional indemnity insurance can also cover the cost of hiring public relations consultants to repair the damage caused to the project manager's reputation as a result of a lawsuit.
The details of a professional liability insurance policy will vary depending on the type of project manager you are and it is always wise to find a broker or insurer who has expertise in your particular industry when seeking insurance cover.
How to compare professional indemnity insurance policies
When comparing professional indemnity policies, you should use some or all of the following broad criteria. Ask yourself whether the policy provides indemnity for:
- Civil liberties (i.e. strict liability where no negligence is involved)
- Unintentional defamation
- Breaches of the Trade Practices Act (i.e. misleading and deceptive conduct that results in a breach)
- Unintentional infringements of intellectual property (i.e. trademarks, patents and copyright)
- Fraudulent or criminal acts by employees
- Acts, errors or omissions by subcontractors
- Legal costs and expenses for attending an inquiry.
- Price is obviously also an important consideration, but rather than looking for the cheapest available cover, price should be viewed in the context of benefits included.
You should also compare the insurers providing the policies. Ask yourself whether they have an A+ security rating, insurers are rated by Standard & Poor's from C (highly vulnerable) to AAA (extremely strong), and whether they have expert knowledge of your industry risk profile.
Getting value out of your cover
To ensure your professional indemnity insurance provides you with the cover you need, take care when drawing up or signing service contracts with your clients. The wrong wording in a contract can trigger an exclusion clause in your professional indemnity policy, resulting in a lack of cover when you need it most.
Beware of the following when entering a service agreement with clients
The 'good faith' requirement that is included in many service contracts. If this is a general requirement for the service provider to act in good faith and is not tied to any specific rights and obligations, then if a civil dispute arises, the contractual or assumed liability exclusion found in most professional indemnity policies could be triggered. This is a clause that excuses the insurer from paying if the insured has a prior contractual obligation or responsibility.
Be wary of wording in a service contract where clients require the inclusion of a commitment to work within a set budget. Budgets are notoriously unpredictable, so committing yourself in writing to a particular sum may cause the insurer to refuse payment if a dispute arises where the budget has been exceeded.
Clauses requiring the service provider to pay 'liquidated damages' if the work is not completed to the required standard (these are excluded in most professional indemnity polices). Yet another example is clauses that make the service provider solely responsible for the project, despite decisions having also been made by the owner. The insurer may opt out of paying a claim because the service provider has assumed greater legal liability than would normally apply at law.
Professional indemnity insurance exclusions specific to project management
Common exclusions found in professional indemnity insurance for project managers include no liability for:
- Claims arising after the policy has been cancelled - in project management, particularly construction, a claim may not arise for some time after the project has been completed, so the project manager needs to ensure there is a 'run-off' extension in their policy.
- Claims related to events that occurred before the policy was taken out.
- Claims related to professional fees being claimed by a project manager's client for services provided.
- Claims arising from the project manager intentionally engaging in fraudulent or criminal acts.
- Claims to cover fines or penalties received by the project manager.
- Claims where the project manager was acting as a director or officer of a company when the liability was alleged.
- Claims where the project manager or their suppliers or contractors were insolvent.
- Claims relating to the project manager operating without the appropriate licences or registration.
- Claims relating to faulty workmanship by the project manager.
- Claims arising from acts of cyber-crime, such as data loss from a computer virus.
Get a quote directly from an insurer
Professional indemnity insurance FAQs
Apply for professional indemnity insurance
Clients who pay for professional advice or services rely on the provider to use their knowledge and expertise to benefit the client. If this does not happen and the client suffers a loss, they will be understandably upset and attempt to recover that loss. Because of the risk this exposes a professional to having professional indemnity insurance is essential to avoid financial ruin.Back to top
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