How to Choose Professional Indemnity Insurance?

Choosing professional indemnity insurance is not just about finding the cheapest quote. PI policies often work differently from many other business insurance policies. They are commonly written on a claims-made basis, which means the timing of your claim, the retroactive date on your policy, and the services listed on your schedule all affect whether you are covered.

This guide is a 10-step buying checklist. It covers what to check before you buy or renew, explains the features that trip people up most often, and flags the exclusions worth reading before you sign.

At a Glance

• Match the policy to your legal entity and the professional services you actually provide.
• Check contract, licence, and professional body requirements before choosing a limit.
• PI is commonly claims-made in Australia. The policy in force when the claim is made or notified may respond, subject to the policy wording and retroactive date.
• If the retroactive date changes when switching insurers, prior work may no longer be covered.
• If you are retiring, selling, or closing the business, ask about run-off cover before cancelling.
• Do not choose on price alone.
• upcover arranges professional indemnity insurance for eligible Australian businesses.

10 Steps to Choosing the Right Professional Indemnity Insurance Policy

Step 1: Check what your contracts and regulators require

Start here. Check whether your contracts specify a minimum PI limit. Check whether your professional registration or industry association requires PI. Check whether any tender or project sets a minimum. The highest requirement you find is usually the minimum your policy may need to satisfy.

For help choosing a limit, see what level of professional indemnity cover do I need.

Step 2: Make sure your legal entity is correct

The policy must match your actual business structure. If you trade as a sole trader but the policy lists a company name (or vice versa), a claim may be disputed. Check that the business name, ABN, and entity type are correct on the policy schedule and Certificate of Currency.

Step 3: Check the professional services description

PI generally responds to claims arising from the professional services described in your policy. If you started as a bookkeeper but now also do consulting and business advisory, the policy needs to reflect that. If you add a new service line mid-year, tell your insurer.

Step 4: Understand that PI is claims-made

Claims-made means the policy in force when the claim is made or notified may respond, subject to the policy wording, retroactive date, and notification requirements. This is different from occurrence-based cover (like most public liability), where the policy in force when the incident happened may respond.

Why this matters when buying: if you switch insurers or let your policy lapse, and a claim arrives after the switch, the old insurer's policy has ended. The new one may not cover prior work unless the retroactive date goes back far enough. Link: claims-made policy.

Step 5: Check the retroactive date

Retroactive date means the earliest date from which covered professional work may be considered under the policy. Claims from work done before this date may not be covered.

The switching trap: When you move to a new insurer, they may reset the retroactive date to the new policy's start date. That can remove protection for years of prior work. Before signing with a new insurer, ask them to match your original inception date. Link: retroactive date.

Step 6: Compare the limit, excess, and defence costs

Limit of indemnity is the maximum the insurer may pay. Check whether it is per claim, in the aggregate, or both.

Defence costs: inside or outside the limit? This is one of the biggest differences between policies. A costs-inclusive policy means every dollar spent on lawyers and investigation reduces the pool left for settlement. A costs-exclusive policy means defence costs are paid on top of the limit, leaving the full amount for the claim itself. Check which model your policy uses.

Excess is what you pay per claim before the insurer pays. A lower premium may come with a higher excess.

Step 7: Read the exclusions

Every PI policy excludes something. The exclusions that appear most often include:

• Known claims and prior circumstances: issues you knew about before the policy started.
• Work outside declared scope: services not listed on your policy schedule.
• Conduct before the retroactive date: work done before the policy's look-back date.
• Contractual liability beyond professional duty: liability you accepted beyond what common law would impose.
• Fraud or dishonest conduct: intentional wrongdoing.
• US/Canada jurisdiction: claims from US or Canadian clients.
• Fines, penalties, and punitive damages: regulatory penalties.
• Bodily injury or property damage: usually handled by public liability.
• Cyber or data breach: may need separate cyber insurance.

Wording varies between insurers. Always read the policy wording and PDS before buying.

Step 8: Check who is covered

Confirm the policy covers the people doing the work: you, your employees, your directors or partners, and any subcontractors if relevant. If you use subcontractors, check whether their work is included or excluded.

Step 9: Ask about run-off cover

Run-off cover means cover arranged after you stop practising, sell, close, or retire, so claims made later about past work may still be considered, subject to policy terms. If you plan to wind down the business, ask about run-off before cancelling. Some policies include an automatic run-off period. Some professions require it.

Step 10: Check the Certificate of Currency

Your Certificate of Currency is what clients, tenders, and professional bodies ask for as proof of cover. Check that it shows the correct business name, ABN, profession, cover limit, policy period, and insurer before sending it out.

Which Professions Should Pay Extra Attention?

Some professions may need to review professional indemnity insurance more carefully because their work can involve higher client reliance, stricter contracts, regulatory requirements or technical risk.

1. Consultants and advisers: check whether your policy covers written advice, reports, strategy recommendations, project management work and any contractual liability limits your clients require.
2. Accountants and bookkeepers: check that your BAS, bookkeeping, payroll, tax support and advisory activities are within scope, and that the policy aligns with any professional body or client contract requirements.
3. IT contractors: check whether your cover responds to technology services, software work, system errors, data loss, cyber-related incidents, outsourced development and service-level obligations.
4. Allied health providers: check that your treatment, advice, reports and telehealth services are covered, and review any regulator, association, retroactive date or run-off cover requirements.
5. Engineers and designers: check how the policy treats design errors, certification, project drawings, specifications, site advice, construction exclusions and project-specific insurance requirements.

For a broader overview, see who needs professional indemnity insurance in Australia.

Three Mistakes That Catch People Out

1. Choosing on price alone. A cheaper policy may have a narrower service description, higher excess, shorter retroactive date, or costs-inclusive defence. The premium saving may cost you at claim time.
2. Resetting the retroactive date when switching. You move to a new insurer to save a few hundred dollars per year. The new policy resets the retroactive date, removing protection for prior work. One claim from that period and you discover the gap.
3. Not updating your services description. You started as a bookkeeper. Now you also do consulting and business advisory. The policy still lists "bookkeeping services." A consulting claim arrives and the insurer reviews the services description.

How upcover Can Help

upcover arranges professional indemnity insurance for eligible Australian professionals and businesses with selected insurers and underwriters. Depending on your occupation and insurer, you may be able to compare cover options, choose a suitable limit, and access a Certificate of Currency.

• 70,000+ businesses covered across Australia.
• 4.9/5 customer rating.
• Instant Certificate of Currency on policy confirmation.

For related guides, see professional indemnity insurance cost, professional indemnity vs public liability, and professional indemnity vs management liability.

upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078.

FAQ

How do I choose the right professional indemnity insurance?

Check your contract, licence, and professional body requirements first. Then compare the services description, limit, excess, exclusions, retroactive date, and claims-made basis across policies. Do not choose on price alone.

What is a professional indemnity insurance checklist?

A PI checklist is a set of things to verify before buying or renewing: legal entity, services description, limit, excess, exclusions, claims-made basis, retroactive date, sub-limits, subcontractor cover, run-off needs, and Certificate of Currency accuracy.

What does claims-made mean for professional indemnity?

Claims-made means the policy in force when the claim is made or notified may respond, subject to the policy wording and retroactive date. If you let PI lapse or switch insurers without checking the retroactive date, prior work may not be covered.

What is a retroactive date in PI insurance?

The retroactive date is the earliest date the policy may look back to for incidents. Claims arising from work done before this date may not be covered. When switching insurers, check that the new policy's retroactive date matches your original inception date.

What are common professional indemnity exclusions?

Common exclusions include known claims and prior circumstances, work outside declared services, conduct before the retroactive date, contractual liability beyond professional duty, fraud, US/Canada jurisdiction, fines and penalties, bodily injury or property damage, and cyber or data breach events.

Do I need run-off cover when I retire?

If you are retiring, selling, or closing the business, claims-made cover stops when the policy ends. Run-off cover may allow claims made after you stop practising to be considered, subject to the run-off terms. Check your policy and professional body requirements before cancelling.

Does PI cover subcontractors?

It depends on the policy. Some PI policies include subcontractor work. Others exclude it. Check the policy wording before relying on cover for outsourced work.

Can I switch PI insurers without losing cover?

Yes, but check the retroactive date on the new policy first. If the new insurer resets it to the new policy's start date, prior work may not be covered. Ask the new insurer to match your original inception date before signing.

Is professional indemnity insurance tax-deductible?

PI premiums are generally tax-deductible under section 8-1 of the Income Tax Assessment Act 1997 where the insurance relates to earning assessable business income. Confirm with a registered tax agent.

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_{Written by upcover's editorial team. Reviewed for insurance content accuracy. The information in this article is general in nature and provided for informational purposes only. It does not constitute personal insurance, legal, or financial advice. It does not take into account your objectives, financial situation, or needs. This guide does not replace your PDS, policy wording, or advice from a broker, insurer, lawyer, accountant, or professional body. Professional indemnity insurance terms, exclusions, limits, and requirements vary by occupation, insurer, and policy wording. Before purchasing or relying on an insurance product, consider the relevant PDS, Target Market Determination, policy wording, and Financial Services Guide. upcover Pty Ltd ABN 17 628 197 437 is a Corporate Authorised Representative (CAR 1299211) of Experience Insurance Services Pty Ltd ABN 41 657 596 506, AFSL 539078. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}