There are several insurance providers who offer Professional Indemnity (PI) insurance. The offerings range from the Professionals Australia (PA) Insurance Broking policies which are tailored to PA members, to other similar policies offered by reputable insurance firms, to “cheap and cheerful” policies available via the internet. In selecting your PI provider it is important to evaluate the adequacy of cover offered as well as the cost. Some low-cost policies contain broad exclusions which can take away large amounts of protection and leave the consultant significantly exposed in the event of a negligence claim.
Here are some examples of exclusions in low-cost policies that have been offered to engineers, project managers and associated consulting professionals in the broader services industry:
- a total exclusion for ‘pollution’. Keep in mind that the legal definition of pollution is very broad – anything involving noise, air, water or vibration may be pollution;
- a blanket exclusion for “high risk” industries, offering no cover at all in areas such as: bridges, dams, mines, swimming pools and often any footing or foundation work;
- no cover for any bodily injury or property damage unless directly caused by your professional services. This can be a significant limitation especially for Project Managers, who may in no way cause Injuries but carry site safety responsibilities and could be held responsible if an Injury occurred on site;
- an exclusion on any claims arising from any actual or alleged restrictive trade practices, restraint of trade or unfair competition. Often large corporates provide consultants with contracts specifying the need for such cover so the exclusion means the member would be in breach of their contract;
- no cover for any corporate advisory work. This exclusion has broad implications and it would be best to avoid any sort of PI policy with such a broad exclusion. The term ‘corporate advisory work’ could mean many things and the worst time to discover exactly what the Insurer thinks it means is when a claim needs to be paid;
- no advice about minimum coverage requirements for your profession. This can create significant added work if you do not meet minimum cover requirements for your profession, whether it be under the Victorian Building Act, to qualify for RPEQ status or otherwise and may result in your licensing application being rejected.
Consultants should be aware that a good Professional Indemnity policy does not have any of the above exclusions automatically in the policy wording and provides a far broader level of cover.
The better Professional Indemnity insurance policies offer include cover for statutory fines and penalties. This is a real benefit for consultants operating in a heavily regulated construction industry where members can be personally named and required to attend official enquiries with statutory fines and penalties which can be imposed.
Professionals Australia Insurance Broking has operated in conjunction with Professionals Australia for over 20 years and would be more than happy to review your existing policy, discuss with you the business activities and ensure the cover is right for your business. Feel free to contact us for an obligation-free discussion about your cover.
Greg Hansen, Director, Professionals Australia Insurance Broking
Phone 1800 800 998