When to provide your Professional Indemnity Insurance Policy
Professional Indemnity Mandatory Requirements
In some states, (Vic, Qld and Tas) there is a mandatory requirement for building professionals to hold this type of insurance in order to legally practice. Each state in Australia has differing requirements with some requiring you to have up to $1.5 million limit of cover and others not needing any mandatory cover at all.
In other instances, while it's not compulsory many government, major organisations and some associations make it a condition of the contract or tender or membership that you need to have the appropriate policy and level of cover.
As a broad generalisation the bigger the client you are working with the more likely they will want you to have this insurance.
When to provide evidence of your Professional Indemnity Insurance
There could be a range of different times when you are asked to show proof of your professional indemnity Insurance policy. But we don’t necessarily recommend that you present it on all occasions.
Below are the 4 common scenarios on when you may be asked about this and how we suggest you proceed in each instance.
1. Registration or License Purposes
If Professional Indemnity Insurance is required for licencing or registration purposes, it’s ok to provide a copy of the Certificate of Currency or your policy schedule to the relevant Authority to demonstrate compliance. This may also include your association if required for membership purposes.
2. Contractual Obligation
Like we touched on above, Government Departments (Federal, State or Local), or larger construction or management companies (such as Westfield, Crown, Centro or Grocon etc) often require this insurance. It may also form part of a subcontract to a principal contractor.
In this instance, you will likely be asked for details of your Professional Indemnity Insurance or to provide a Certificate of Currency. In this circumstance, it's perfectly ok to provide this mandatory information, as it becomes part of your contractual obligations.
We suggest you share your Certificate of Currency and not a copy of your Professional Indemnity Schedule as it contains more information than is generally required from the department or organisation you are contracting to.
3. Financial Institutions
We have started to notice that lenders are engaging Quantity Surveyors on some larger proposed projects. Part of the contractual requirement between the lender and the surveyor is that the surveyors may ask for copies of Professional Indemnities Insurance from all parties engaged in the project.
If this occurs, you aren’t obliged to have to supply a copy of your policy. We would suggest you simply advise the critical details such as dates, insured amount and insurer, but the lender documentation or conditions are not your concern. The lender is looking for this information as a way to protect themselves if something goes wrong down the track.
4. A disgruntled client
If an unhappy customer asks you for a copy of your Policy, the best approach is to let them know that you have a current Policy in place and suggest to them that they should seek legal advice.
Refrain from sending them a copy when they first ask for it. You should notify your insurance broker straight away if you become aware of any circumstance that may lead to a claim.
If you receive a claim of a notification against you, immediately send it onto your insurance broker with any relevant information about the case.
In all but a few circumstances, your Professional Indemnity is your business, and you should be protecting the information. Unless you are specifically required to supply it pursuant to a contract, statute or a court order.
If you have a circumstance not listed here and are unsure about whether you should provide your policy get in touch with us and we’d be happy to help. cgib offers specialist Professional Indemnity policies for building designers and architects. We have joined forces with Building Industry Solutions (B.I.S) to provide a robust platform which supports Australia’s largest Building Designer Professional Indemnity scheme offering.