Professional Indemnity Insurance (PII) protects you and your business against claims for alleged negligence or breach of duty arising from an act, error or omission in the performance of professional services.[1]
Professional indemnity claims can arise from genuine mistakes such as giving an incorrect diagnosis, incorrect advice, or losing documentation. It also covers breaches of privacy.
PII insurance can cover your legal costs, compensation costs and time spent away from your business. It can also protect the reputation of your business because you’ll be able to afford to go to court to defend yourself and your decisions, rather than quietly offering a compensation payment to avoid the expense of legal action.
AHPRA has very strict rules about PII. It mandates that all psychologists must have PII in order to register and to practice psychology. AHPRA makes it very clear that the PII must cover all aspects and locations of your practice whether you are working in the government or the private sector, whether you are full-time, part-time, self-employed or a volunteer.
The amount of cover you should have depends on the nature of your practice. The aim is to have enough to meet the legal liability if a claim is made against you. Cover starts from $2,000,000 and goes up to $20,000,000.
Some policies have ‘automatic reinstatement’ which means that the amount that you’re insured for will be restored for a new claim, if a claim has already been paid out.
If you are employed, your employer will probably have PII in place, but it is worth checking what their arrangements are.
If you are self-employed, you will need to make your own PII arrangements and have a Certificate of Currency, or other documentation showing that you have current PII.
If you carry out a combination of employed and self-employed roles, you will need to have PII arrangements which provide appropriate cover for all aspects of your practice.
If you’re currently not practicing, but registered, you’re not required to have PII, but you must have what’s known as run-off cover, which protects you against claims arising from the time you were practicing. Run-off cover may be part of a PII policy or may be purchased separately. If you’re planning to take maternity leave or an extended break, it’s worth checking that you have this in place.
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