Finance

Professional Indemnity Insurance

Professional Indemnity Insurance (PII) is a vital component of risk management for professionals in Australia. It provides financial protection and peace of mind to those who offer services and advice, safeguarding them from potential legal liabilities arising from errors, omissions, or professional negligence. Let’s examine what professional indemnity insurance is, what it covers, who needs it, and how much it typically costs.

What is Professional Indemnity Insurance in Australia?

Professional Indemnity Insurance, often abbreviated as PII, is a specialised liability insurance designed to protect professionals from legal claims and financial losses associated with their professional services. In Australia, PII is regulated by specific legislation and standards, making it a legal requirement for various professions. The primary intention is to ensure that clients who rely on professional expertise are not left exposed to financial harm due to professional errors or negligence.

What Does Professional Indemnity Insurance Cover?

Professional Indemnity Insurance in Australia provides coverage for a range of scenarios, including:

  1. Professional Negligence: PII covers claims related to errors, mistakes, or failures in delivering professional services. This can include incorrect advice, inaccurate designs, or any other professional misconduct that causes financial harm to the client.
  2. Breach of Professional Duty: If a professional breaches their professional duty to a client, leading to a claim, PII can cover the associated legal costs and potential damages.
  3. Legal Costs: PII not only covers the damages awarded to the claimant but also the legal expenses incurred in defending a claim, including legal fees, court costs, and settlements.
  4. Loss of Documents: Coverage extends to instances where essential documents are lost or stolen, causing financial loss to a client.
  5. Defamation: In cases of alleged defamation or libel while providing professional services, PII can provide protection.

Who Needs Professional Indemnity Insurance?

Professional Indemnity Insurance is not mandatory for all professionals in Australia, but it is required for specific occupations, including:

  1. Medical Practitioners: Doctors, nurses, and allied health professionals must have Professional indemnity insurance to practise.
  2. Legal Practitioners: Lawyers and solicitors must have PII to maintain practising certificates.
  3. Accountants: Certified practising accountants and auditors need PII.
  4. Architects and Engineers: Professionals in the construction and design industries typically require PII.
  5. Financial Advisers: Those providing financial advice or services are subject to PII requirements.
  6. Insurance Brokers: Professionals who provide insurance advice and services must have PII coverage.

While these professions are legally obligated to have PII, many other professionals and businesses may choose to obtain it voluntarily. Even if not mandated, Professional Indemnity Insurance offers valuable protection for anyone who provides services or advice, as it can safeguard their assets and reputation.

How Much Does Professional Indemnity Insurance Cost?

The price of Professional Indemnity Insurance in Australia can vary notably based on several factors, including the profession, the annual turnover, and the level of coverage required. Here are some key factors that influence the cost:

  1. Profession: Different professions have varying levels of risk, which can impact the cost of PII. Professions with a higher risk of claims may pay higher premiums.
  2. Annual Turnover: The annual revenue of the business or professional can influence the cost. Higher turnovers generally result in higher premiums.
  3. Level of Coverage: The required coverage, or the policy limit, will affect the premium. Professionals who want higher coverage limits will pay more.
  4. Claims History: A history of prior claims can impact the cost of PII. If a professional or business has a track record of claims, insurers may charge higher premiums.

To provide a rough estimate, the annual premium for Professional Indemnity Insurance can range from a few hundred dollars for low-risk professions to several thousand dollars for higher-risk occupations. It’s essential to obtain quotes from professional insurance brokers and carefully review the terms and conditions to determine the most suitable and cost-effective coverage.


Professional Indemnity Insurance is a critical component of risk management for professionals in Australia. It offers protection against various liabilities, including professional negligence, breach of duty, legal costs, and more. While it is mandatory for certain professions, many others choose to have it voluntarily to safeguard their businesses and reputations. The cost of professional indemnity insurance varies based on profession, annual turnover, coverage level, claims history, and other factors. Professionals and businesses should carefully assess their needs and secure appropriate coverage against potential legal liabilities.