Professional indemnity insurance sounds highbrow doesn't it? What does it mean and how important is this type of insurance? The basic purpose of this insurance is to insure those who give professional advice in any sort of professional work. For instance a stockbroker or a doctor are both at risk of being sued for wrong or faulty advice and so that's where Professional indemnity insurance comes into play. It covers the risk!
For instance a stockbroker who advised his client to sell stock could face being sued for losses by his client on the basis that the stockbroker had sold his services as an expert and had proven to be incompetent. Equally the family could sue a medical doctor who radically misdiagnoses a patient's disease and this lead to the patient's death. This can be stretched out to include a tax agent or an architect or a psychologist all of who are in the advice business and this advice when acted on should be safe advice from money investments to health to public safety.
So if you are in the business of advising make sure you are covered by Professional indemnity insurance because you can be bankrupted if you are on your own. The other side of the coin is for the person who makes claims who if creating a court action for a claim and it proves to be unfounded could be directed by the court to pay all costs. So from both ends of the world of professional advice it's wise to do your homework.
If you are in the process of getting Professional indemnity insurance then get ready for a big cost because it is the highest costing of all insurances because claims can go into millions of dollars. However regardless of cost you can't do without it, as nothing is watertight predictable and the best of professionals can end up facing a court process.
The only other option is to get out of the business, which has happened - take the example of some in gynecology who deliver the child badly damaged and millions are claimed for lifetime support - many gynecologists have been scared out of that specialty and have returned to general practice.
So while Professional indemnity insurance is hard to understand and it has a time delay in getting the necessary approvals its not just necessary but essential and the practitioner who works while the time delay of getting the insurance is a fool and the person who thinks they will never be charged with ill advice is equally foolish. The Boy Scout's motto "be prepared" was never more relevant.