Professional Indemnity Insurance (PI) is required by expat professionals whilst operating their business in Australia.
Professionals are someone who offers services or advice in a specialised field or discipline. The professional is qualified to provide such advice/service usually for a fee/remuneration.
Traditional professionals include accountants, lawyers, insurance brokers, engineers, architects, real estate agents, and consultants. Non-traditional professionals include agricultural consultants, migration consultants, freelance journalists, translators, naturopaths and any business which provides professional services or advice.
Professional Indemnity is designed to protect Insured Professionals from economic loss, sustained by third parties as a result of the performance of the Insured’s professional services and advice.
The (PI) policy provides the Insured cover for Investigation, Defence Costs, and Settlements.
Professional Indemnity can also be known as E&O (Errors and Omissions) or Professional Liability Insurance.
Most PI policies operate on a “claims made and notified” basis. This means a claim must first be made against the Insured and notified to the Insurer during that period of insurance.
Therefore, when the Insured first becomes aware of a claim or circumstances which may give rise to a claim against them, they must notify the Insurer of this event during that period of insurance. The Period of Insurance is always clearly outlined on the policy schedule.
A claim against the Insured includes a verbal notice made against the Insured during the Period of Insurance, as well as a written notice for damages by a third party or civil proceeding.
Below are examples of claims recently received by Insurers we deal with:-
The Insured was hired to provide advice to a customer regarding the correct management of their crops. The Insured failed to consider the soil residual herbicide that had been applied to the crops in the prior year and as a result, the crops failed. The client sought reimbursement for loss of income and yield from the Insured.
The Professional Indemnity Insurer appointed lawyers, assessed the loss and payment was made in the amount of $60,000 to the client subject to them signing a deed of release.
A former client made a claim against the Insured regarding negligent advice in regard to making contributions into their Self-Managed Super Funds (SMSF).
The client’s Financial Planner had prepared a Statement of Advice recommending the superannuation contributions, which the Insured approved. As a result, the claimant had to pay $150,000 in excess contributions liability.
The Insured claimed under the PI Policy and commercial settlement was reached between the parties and a deed of release was signed. The payment amount was $99,000.
Land Surveyor and Town Planning/Building Surveyor
A claim for loss was made against the Insured in regards to providing incorrect advice on the potential sub-division of a property a client of the Insured had purchased.
The Insured was covered under his PI Policy for legal and defense costs in responding to the claim. A settlement payment of $800,000 was made.
The above claims scenarios are evidence of the importance of Professional Indemnity Insurance for any business person who provides professional services and/or advice.
Written by: Michael McMahon from Gibson Insurance
It is highly recommended that any Expat whose business involves overseas travel, should effect a Corporate Travel Insurance Policy.
A Corporate Travel Policy will provide coverage for overseas trips up to a duration of 26 weeks.
The scope of cover provided under this type of policy include Medical Expenses, Death & Capital Benefits, Loss or damage to Baggage, Electronic Equipment, Loss of Credit Cards, Theft of Money, Hire Car Excess Expenses, Loss of Deposits and Cancellation Charges, Kidnap, Extortion and Ransom.
Below are actual case studies of recent Medical Expenses Travel Insurance losses incurred whilst claimants were overseas. This reinforces the absolute necessity to protect yourself and your business from these exposures whilst undertaking business and associated leisure travel.
David (an Australian Resident) was insured under a Corporate Travel Insurance Policy while he was on a short-term working assignment in the Solomon Islands. On 12/09/2017 he started feeling unwell with abdominal pain and presented himself to a local clinic.
Provisional diagnosis was infectious Gastroenteritis, acute abdominal rupture and appendicitis. There were no clinics available for the claimant to undergo diagnostic imaging and hence he was placed in an air ambulance and evacuated back to Australia. The total amount of the claim was $57,527.37.
Edward attended an international business conference in the Philippines. At the conclusion of the conference he stayed on for an additional week’s holiday.
During that holiday he was struck by a motorcycle and sustained multiple soft tissue and musculoskeletal injuries including left clavicle fracture, multiple fractures to left and right ribs, crush fracture of the 12th thoracic vertebrae and right shoulder ligament ruptures. The total amount of the claim was $23,428.57.
Gerard, a 73-year-old director of an IT company, planned a 6-week overseas trip with his wife, to the USA commencing June 2017. Unbeknown to him, at the time of embarking on the journey, he was developing what would become a significant cardiac infection – “bacterial endocarditis”.
By the time he landed in the USA his cardiac symptoms fully manifested resulting in cardiac infection, multiple body organ sepsis and several strokes secondary to the above.
Gerard was admitted to high dependency specialist care. The claimant’s wife and Insurers were advised that Gerard most likely would not survive. Gerard was transferred to palliative care where he eventually passed away some two months later. The total amount of the claim was $1,300,000.
Although this case had a sad outcome, it highlights the importance of having travel insurance to protect against what can be substantial and significant costs.
By: Michael McMahon
Gibson Insurance Brokers
Taking out the right insurance will help you protect your family and your business. And there isn’t a more crucial time to protect your family than moving to a new city in Expatland. But what insurance do you need?
Michael McMahon from Gibson Insurance Brokers has written a guide to help you understand what insurance is needed to ensure you have the right level of protection.
In this guide Michael touches on the following types of insurances:
- General Insurance
- Business Insurance
- Vehicle Insurance
This is essential reading to help you evaluate your insurance needs when moving to Sydney.
Download the publication here.