Professional Indemnity Insurance is a form of protection that is essential to any business (Accountants, Bookkeepers, BAS Agents and Tax Agents included) that gives professional advice or provides a service to a client. If a client believes that you have made an error in providing them your services for which you charge a fee that has caused them to incur a personal or financial loss, then a Professional Indemnity Insurance policy covers the cost of any legal support and damages you have to pay to the client or in defending your business.
A claim might arise as a result of a breach of the professional’s duty of care or alternatively, in some cases, from a mistake where there is no negligence i.e. breaches of the Consumer Protection Act, copyright, confidentiality and fiduciary duty.
Who is a Professional?
A professional is anyone who gives to another person, advice and/or services of a skillful character according to an established discipline and has the qualifications and experience to give that advice.
Why is Professional Indemnity Insurance so Important?
Professional Indemnity Insurance helps to protect a mistake from costing someone their business. The legal costs in protecting your business that can arise from a claim by a client for any personal or financial loss can often be significant. If a business did not have a Professional Indemnity Insurance policy then they would need to sustain the costs and seek those resources to protect themselves.
Do I Need It?
Professionals have a duty of care to their clients (and/or third party who suffers a financial loss resulting from the professionals advice) to exercise the skills of the profession in the fulfilment of their clients instructions based on a reasonable degree of skill, competence and ability based on experience and qualifications. Professionals are therefore exposed to claims for breach of duty and/or may be held to be liable for mistakes even though there was no negligence on their part.
To determine if a professional has failed to exercise their duty of care, a court will examine evidence given by an expert witness to determine if their action would meet the ‘reasonable degree of skill and care’ expected of the profession. Any financial loss arising from a mistake or failure by that professional to perform their duty may result in an award in favour of a third party or client who as a result suffers a loss.
The cost of legal action can financially cripple some businesses, not to mention the possible loss of income. Although it may seem like an option to settle the claim with the clients quickly, this can be perceived as admitting guilt and can affect a business’ professional reputation.
Professional Indemnity Insurance allows a business to pursue the proper legal avenues while defending their reputation. It is absolutely essential and compulsory for Accountants, Bookkeepers, BAS Agents and Tax Agents.
Find out more
If you would like to find out more or if you’d like to compare PI Shield to your current Professional Indemnity Insurance by obtaining an obligation-free quote click the applicable button below.
Alternatively you can contact us directly and we will get back to you shortly.