Professional Indemnity Insurance for Startups

Professional indemnity insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms. Professional indemnity insurance for startups may be required when a client contract asks for evidence of cover at a stated limit before work begins.

Cover depends on the policy and insurer you choose. Check the policy wording and its terms and conditions for what is and isn't included.

Key takeaways

• Clients may set insurance requirements in a contract, including the cover type, limit and insured entity.
• A business pivot or new ABN may mean a startup's policy schedule needs updating.
• Letting cover lapse, or trading before arranging insurance, may leave earlier work outside a new policy.

Do startups need professional indemnity insurance?

Professional indemnity insurance is not a general legal requirement for startups in Australia. However, clients and some licensing regimes may require it.

Australian financial services licensees serving retail clients must have compensation arrangements in place under the Corporations Act. ASIC Regulatory Guide 126 explains how professional indemnity insurance may be used to meet that obligation.

What should a startup check in a client contract's insurance clause?

A client contract may specify the type of insurance required, the minimum limit and the documents needed to demonstrate cover. The startup insurance guide explains how insurance requirements can change as a business grows.

Startups taking on overseas customers may also need to check where their policy applies. The US customers guide explains territorial and jurisdictional restrictions.

Does a startup need standard or tech professional indemnity?

A startup may consider standard professional indemnity insurance or technology professional indemnity (Tech PI) insurance, depending on the services or products it delivers. Tech PI insurance is designed to cover claims that your advice, service or work caused a client financial loss. It may include legal defence costs, compensation and any settlement you are legally liable to pay, subject to the policy terms.

Standard professional indemnity is commonly used by businesses providing advice, consulting, professional services or specialist work.

Tech PI, sometimes called tech E&O (errors and omissions), is commonly arranged by technology businesses whose clients rely on their software, systems or advice. The Tech PI explainer describes the cover in more detail.

Does a pivot or new ABN affect a startup's cover?

After a business pivot or ABN change, a startup's policy schedule may no longer match its services or contracting entity.

A professional indemnity policy is designed to respond to claims arising from the professional services described on the policy schedule. If a client makes a claim about a service that was not disclosed, the insurer may decline the claim where the activity falls outside the agreed cover.

The policy schedule also names the insured, meaning the person or organisation covered by the policy.

Before moving to a new company or ABN, or materially changing your business activities, speak to your insurer, insurance broker or the upcover team about whether your policy needs updating.

Is professional indemnity insurance for startups claims made?

Professional indemnity insurance is generally written on a claims made basis. This means the policy in force when a claim is first made against you may respond, subject to its terms and notification requirements. A claim may take the form of a letter of demand, writ or civil proceeding.

This differs from an occurrence-based policy, where the trigger generally relates to when the incident happened. Maintaining continuous professional indemnity cover can be important because claims may arise long after the work was completed.

The retroactive date is another important consideration. It determines how far back the acts, errors or omissions giving rise to a claim can have occurred for the claim to potentially be covered. Work completed before the retroactive date may fall outside cover. A lapse in insurance may also create gaps, depending on the terms of the replacement policy.

Some insurers may offer an unlimited retroactive date or other prior-acts cover, subject to underwriting and policy terms. Speak to your insurance broker or the upcover team about the available options.

What do standard and tech professional indemnity commonly exclude?

Professional indemnity and Tech PI policies commonly exclude certain liabilities that arise only because of a contract, along with other matters.

Professional indemnity insurance

Exclusions commonly include, but are not limited to:

• Liability you take on under a contract that would not otherwise exist under the law
• Refunds, or the cost of redoing, correcting or improving your own work
• Claims and circumstances you knew about before the policy started

Tech professional indemnity

Exclusions commonly include, but are not limited to:

• Service credits, liquidated damages and other liability accepted under a contract that would not otherwise exist under the law (contractual liability exclusion)
• Physical injury or property damage

Important: These lists are not exhaustive. Exclusions vary between insurers. Always refer to the policy wording and its terms and conditions for the exclusions that apply to you. If you have questions, speak to your insurance broker or the upcover team.

How upcover can help

upcover arranges professional indemnity and Tech PI insurance for Australian startups. With more than 80 insurance partners, upcover can arrange quotes from a range of insurers.

• 70,000+ businesses covered across Australia
• 4.9/5 customer rating
• 80+ insurance partners

Get a startup insurance quote.

Frequently asked questions

How much does professional indemnity insurance for startups cost?

The cost may depend on factors including your industry classification, revenue and stage of business. The professional indemnity cost guide explains what may affect premiums.

Is startup professional indemnity insurance a separate product?

Startup professional indemnity insurance usually refers to professional indemnity or Tech PI arranged for an early-stage company, rather than a separate insurance product.

Does a startup's cover extend to work by subcontractors?

Whether a professional indemnity policy responds to work performed by subcontractors depends on its wording. Check with your insurance broker or the upcover team to understand how subcontracted work is treated.

Do investors review a startup's insurance?

Investors may review a startup's insurance information during due diligence, including whether cover has remained continuous. The startup insurance due diligence guide explains what investors may request.

Does a fintech startup need different insurance?

A fintech startup's insurance requirements may depend on whether it operates as a regulated financial services business or a technology supplier. The fintech insurance guide explains these considerations.

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_{Written by upcover's editorial team.}

_{This article provides general information only and does not take into account your objectives, financial situation or needs. It is not legal advice: get legal advice about the insurance and indemnity clauses in your client contracts and any change to your company structure. Laws and regulatory guidance referred to are as at October 2026 and may change. Insurance availability and cover are subject to underwriting and the terms, conditions, limits and exclusions of the relevant policy. Read the policy wording and its terms and conditions before deciding. upcover arranges insurance products with selected insurers and underwriters and does not compare all general insurers or insurance products available in the market.}