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Professional indemnity (PI) insurance covers you if a client, or someone else who relied on your work, claims your advice, design or professional service was negligent and caused them a financial loss. It pays the cost of defending the claim and any compensation you're found liable for, up to the policy limit. It suits anyone paid for expertise: consultants, accountants, designers, engineers, IT contractors, health practitioners and advisers.
For some professions PI isn't optional. Registered health practitioners, tax and BAS agents, financial services and credit licensees, solicitors, registered migration agents and some building practitioners must hold it by law or as a condition of registration. PI also works differently from most insurance: it is usually written on a claims-made basis, which makes retroactive dates and run-off cover as important as the limit.
By Better Rate Mate Editorial Team ยท Last reviewed
PI responds to claims that you breached your professional duty. Common examples:
For most businesses PI is a commercial decision, but business.gov.au notes it is mandatory for some professions. The table lists requirements we verified with the rule-setter. It is not exhaustive: many professional associations also make PI a condition of membership.
| Profession | Who sets the rule | Requirement |
|---|---|---|
| Registered health practitioners | Health Practitioner Regulation National Law (s 129) and each National Board, through Ahpra | Must not practise unless appropriate PI arrangements are in force; declared at registration and each renewal |
| Tax agents and BAS agents | Tax Practitioners Board | Must maintain PI meeting the TPB's requirements; minimum cover scales with turnover, from $250,000 for turnover up to $75,000 |
| Financial services (AFS) licensees with retail clients | Corporations Act s 912B, ASIC RG 126 | Must have compensation arrangements for retail clients, generally through PI |
| Australian credit licensees | National Consumer Credit Protection Act s 48, ASIC RG 210 | Must have adequate compensation arrangements; PI is the primary way to comply |
| Solicitors | State legal profession rules (e.g. Law Society of NSW; LPLC in Victoria) | Must be covered by the approved PI scheme before practising (exemptions apply, e.g. many corporate and government lawyers in NSW) |
| Registered migration agents | Code of Conduct for registered migration agents | Must hold PI of the kind prescribed by the Migration Agents Regulations 2026 |
| Registered design practitioners (NSW) | Design and Building Practitioners Act 2020 | Mandatory insurance since 1 July 2022 for work on regulated buildings |
| Some Victorian building practitioners | Ministerial Order under the Building Act 1993 | PI required for classes including building surveyors, building inspectors, quantity surveyors and draftspersons |
Most insurance is written on an occurrence basis: the policy in force when the accident happened pays. PI is different. The Tax Practitioners Board puts it plainly: PI policies are usually "claims made and notified" policies. The policy that responds is the one in force when the claim is first made against you and notified to the insurer, not the one in force when you did the work.
That has three practical consequences. You need to keep cover in place continuously, because a claim made in a year when you had no policy is uninsured even if the work was done while you were covered. You must tell your insurer promptly about any circumstance that could lead to a claim, such as a client complaint, during the policy period. And a policy normally won't cover circumstances you already knew about before it started, so answer the proposal questions about known issues accurately.
Because claims can arrive years after the work, a claims-made policy needs a way to deal with the past. The retroactive date does that. The TPB describes retroactive cover as a feature that extends cover into the past, back to the retroactive date. Work done before that date isn't covered, even if the claim is made while the policy is running.
An unlimited retroactive date covers all your past work, subject to the policy's other terms. A retroactive date set at the day you first bought cover protects only work done since. When you switch insurers, check the new policy keeps your existing retroactive date. Losing it can quietly remove cover for years of past work.
If you retire, close the business, sell it or change careers, the claims-made rule means your past work is uncovered once your policy ends. Run-off cover fills that gap. The TPB describes it as cover for unknown claims made and reported after the PI policy has expired. The Psychology Board of Australia's registration standard notes run-off may be included in a PI policy or may need to be bought separately.
The TPB recommends run-off cover for tax practitioners, and if you are a registered health practitioner, check your National Board's PII standard for what it expects when you stop practising. Either way, ask about run-off before you cancel a policy, not after.
Exclusions vary, but these are common, along with where to look instead. Injury and property damage claims belong to public liability, and claims by your own staff to workers compensation or the employment practices section of management liability.
| Not covered | Where to look instead |
|---|---|
| Circumstances you knew about before the policy started | Notify them under the policy in force when you became aware |
| Work done before the retroactive date | Negotiate the retroactive date, or keep your previous policy's run-off |
| Injury to people or damage to property | Public liability |
| Claims by your employees | Workers compensation or management liability |
| Liability you accept under a contract beyond what the law imposes | Negotiate the contract terms |
| Fraud and dishonesty, fines and penalties | Not insurable (some policies cover innocent partners) |
| Services you didn't declare | Tell your insurer about every service you provide |
The simplest test is what went wrong. If someone is hurt or their property is damaged, it's usually a public liability claim. If a client lost money because of your advice or professional work, it's usually a PI claim. Many service businesses need both: an accountant who damages a client's office while visiting needs public liability; the same accountant who gives wrong tax advice needs PI.
| Professional indemnity | Public liability | |
|---|---|---|
| Covers | Financial loss caused by your professional advice or service | Injury to people and damage to property |
| Typical claimant | Your client, or someone who relied on your work | Customers, the public, anyone other than employees |
| Usual trigger | Claims made (the policy in force when the claim is made) | Occurrence (the policy in force when the event happened) |
| Required by law? | For some professions | For certain occupations in some states |
Start with any minimum you are bound by. The TPB, for example, sets minimum cover for tax and BAS agents that scales with turnover, and client contracts often name a figure. Beyond that, think about the largest loss a single mistake of yours could plausibly cause a client, and whether the policy limit is per claim or an aggregate for the year.
Premiums depend mainly on your profession, the services you provide, your fee income, the limit and excess, your claims history and where your clients are, with work for clients in the United States often excluded or priced separately. Compare quotes with the same limit, excess, retroactive date and services declared.
Insurance that covers your legal liability if a client or someone else who relied on your work claims your professional advice or service was negligent and caused them a financial loss, including the cost of defending the claim.
Claims alleging a breach of professional duty, such as negligent advice, errors or omissions in your work, and often unintentional breach of confidentiality or loss of documents, plus legal defence costs, up to the policy limit.
You must hold it if your profession requires it, including registered health practitioners, tax and BAS agents, AFS and credit licensees, solicitors and registered migration agents. Otherwise it's worth having if a client could lose money because of a mistake in your work, or if contracts require it.
It depends on your profession and services, fee income, the limit and excess, claims history and where your clients are. Get quotes with the same limit, excess, retroactive date and services declared to compare them properly.
Commonly: circumstances you knew about before the policy started, work before the retroactive date, injury and property damage (public liability), employee claims, liability accepted under contract beyond the law, fraud and dishonesty, and fines.
If your profession requires it, practising without it can breach your registration or licence conditions. Otherwise, you'd pay the cost of defending any claim and any compensation yourself, which can threaten the business and, for sole traders, personal assets.
Cover for claims made after your PI policy has ended, about work you did while you were practising. Because PI is claims-made, you need it when you retire, sell or close the business. It may be included in a policy or bought separately.
The date from which past work is covered. Work done before the retroactive date isn't covered, even if the claim is made while the policy is in force. Keep the same retroactive date when you change insurers.
This page explains how professional indemnity insurance generally works. It is not advice about your obligations or any particular policy. If your profession has a PI requirement, check the current standard with your registration body, and read the Product Disclosure Statement before you buy.
