By Robyn Styles
For many professionals, paying an annual premium to renew their Professional Indemnity insurance is just another cost of doing business. But for the small number who have had cause to make a claim even once during their career understand the true value of this insurance policy.
What you’re actually paying for
If you’re a business owner, Professional Indemnity insurance can help protect you against the financial consequences of mistakes, errors or omissions, and failing to meet expected standards. It can also protect against accusations that you’ve done something wrong (even if you haven’t) and can help manage your personal and business reputation.
It’s a cost-effective way of reducing risk for sole practitioners and business owners.
Professional Indemnity policies are designed for and available to professionals across a range of industries including financial services. They may cover the costs and expenses of defending a legal claim arising from a breach of professional duty, as well as any damages payable.
The value of Professional Indemnity cover is for both you and your clients. ASIC requires mortgage brokers to have a policy, as it wants to ensure the consumer is protected – by knowing that a mortgage broker has the financial capacity to compensate the consumer if necessary.
Help at hand
A financial services professional running her own business told us recently she never stopped to think about why she had to sign up for Professional Indemnity cover, or what it had to offer her. It was just one on a long list of ‘to-dos’ when she was setting up as a sole trader in a new line of work.
“I didn’t know anything about it or understand the necessity,” she said. “When I was faced with a complaint out of the blue in my second year of practicing, I still didn’t understand what my cover entitled me to – but I learnt pretty quickly!”
She says the whole experience was very traumatic, from a personal as well as professional perspective. “It really knocked the wind out of my sails, but as soon as I contacted the Insurance House Customer Support Team, I felt in safe hands. They completely understood what I was going through and how I felt.”
The complaint process is ongoing, but our client has been able to move on. “I’ve been allocated a lawyer and he’s working everything through on my behalf. It is so reassuring to know that, for a small annual fee, I have such resources to call on.”
Value of insurance
In an increasingly litigious society, more consumers are flexing their rights when they feel they have not been well served. It is a healthy trend when the threat of legal action raises professional and commercial standards.
Unfortunately, the nature of many professional services is that they are not explicitly black and white by definition or outcome. A consumer with a grievance may take it further – which can become a long and costly process for the service provider. Professional reputation and compensatory costs can be at stake if the complaint is upheld, and the costs of specialised legal support can mount rapidly.
The value of Professional Indemnity insurance is knowing that, should the worst happen, you are being supported throughout by understanding professionals with strong expertise in financial services claims.
About the Author
Robyn Styles is the Key Account Relationship & Development Manager at Insurance House responsible for overseeing our key relationships within the Mortgage Broking industry.
To connect with Robyn on LinkedIn click here.
The advice provided is general only. Please click here to read our full general advice warning.