Professional indemnity insurance – Essential facts

Professional indemnity insurance can provide cover for businesses and individuals who deliver professional services from the legal costs and claims for damages from an act, omission or breach of duty that occurs as a result of their actions.

This insurance may have the provision for cover should for example:

  • An architect is sued for creating a flawed house design after the owners had to pay to fix a flawed extension.
  • A marketing agency who print a client’s brochure with incorrect contact details, resulting in the client commencing legal action against the agency.

It is important to understand how this type of cover works because many people think it does not apply to them, when it can provide an important line of defence in many different circumstances.

Cover is available in many different industries
Don’t assume you can only take out professional indemnity insurance if you are a member of one of the traditional ‘professions’. You don’t have to be a doctor or a lawyer to take out this type of cover. In fact, anyone who is in a role in which they provide advice should consider whether professional indemnity insurance could provide protection from litigation.

Many professions such as plumbers, tree loppers and builders give advice, but don’t always take out professional indemnity insurance. They may be exposed if a customer follows their advice to their detriment.

Professional indemnity insurance only provides cover when the policy is current
Professional indemnity insurance only covers policy holders while a policy is live. If you have taken out a policy in the past, then it has lapsed, you will not be covered for claims that concern events that happened when the policy was active. This means professionals should consider whether they need to maintain professional indemnity cover even when they retire. In some professions, for instance accounting, there is a requirement to maintain cover even when you retire or leave the profession.

Understand any exclusions
Professional indemnity insurance is a complex area and many insurers will not cover certain risks in policies.For instance, most insurers won’t cover builders and other entities in the construction sector for any damages that relate to building cladding, given the problems many strata buildings have encountered with flammable materials.

This means it is essential to read the fine print in policies and develop a real understanding about which professional risks are covered and which are not.

Fitzpatrick & Co have specialised in the horticulture and arboriculture industry for over 30 years.

For more information or questions on Professional Indemnity Insurance or your own policy, please contact Fitzpatrick & Co. Insurance Brokers on 03 8544 1600, email OR visit their website at

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