Professional Indemnity Insurance in Australia Explained (With Real Claim Examples)
Professional Indemnity (PI) insurance is one of the most misunderstood — and most important — covers for Australian businesses that provide advice, design, or professional services.
Many professionals only realise how critical PI insurance is after a claim arises. This guide explains what PI insurance covers, who needs it, and what actually happens when something goes wrong.
What is Professional Indemnity Insurance?
Professional Indemnity insurance protects businesses against claims alleging:
Professional negligence
Errors or omissions
Breach of duty
Misrepresentation
Financial loss caused by advice or services
It covers legal defence costs, settlements, and compensation.
Who needs PI insurance in Australia?
PI insurance is essential for:
Consultants
Engineers
IT professionals
Real estate agents
Accountants & bookkeepers
Marketing & creative agencies
Medical & allied health professionals
In many industries, PI is contractually or regulatorily required.
Real Australian PI claim examples
Example 1: Consultant advice leads to financial loss
A management consultant provided strategic advice that led to a client making significant financial decisions. When the strategy failed, the client sued for losses exceeding $700,000.
✔ PI insurance covered legal defence and settlement.
Example 2: IT services error
An IT provider incorrectly configured a system upgrade, causing prolonged business interruption. The client alleged negligence and sought damages.
✔ PI insurance responded, including legal costs.
Example 3: Real estate disclosure issue
A real estate agency failed to disclose material information during a transaction. The buyer pursued compensation.
✔ PI insurance covered the claim.
What PI insurance doesn’t cover
Common exclusions include:
Intentional wrongdoing
Fraud
Known issues not disclosed
Uninsured contract assumptions
This is where policy wording matters — not just price.
How much PI insurance do you need?
It depends on:
Industry risk
Contract requirements
Revenue
Claims history
Nature of advice or services
Many contracts specify minimum limits — often $2M to $10M.
Why buying PI insurance “direct” is risky
Online policies often:
Lack tailored endorsements
Have restrictive exclusions
Don’t align with contracts
Offer limited claims advocacy
When a PI claim arises, the wording is everything.
How a broker protects you
A broker:
Matches PI cover to your actual services
Reviews contracts for compliance
Negotiates insurer terms
Acts as your advocate during claims
At Design Cover Insurance Brokers, we structure PI cover to protect your business, reputation, and future income — not just tick a box.
Final thought
Professional Indemnity insurance isn’t about fear — it’s about certainty. One allegation can threaten years of hard work.
📞 If you provide advice or professional services, a tailored PI policy is essential.