4 Professional Indemnity Myths and Overcoming Client Objections

There are a lot of business insurance myths out there. This is understandable. Insurance products are complex, and they’re probably the last thing your client wants to think about.

Clearing up these misconceptions—and overcoming the objections that come with them—is part of the critical role a broker has in the process. Professional Indemnity (PI)* is one product that’s often misunderstood. Let’s look at four common PI myths and how you can help set your clients on the right track when it comes to their business insurance needs.

1. “I have a risk management plan, so PI cover isn’t necessary.”

Risk management plans are an excellent way to help minimise threats to a business. Unfortunately, they aren’t foolproof. Mistakes can slip through multiple rounds of review, leading to claims of negligence. Events beyond your client’s control can lead to missed deadlines, undelivered services, or contract breaches that trigger a claim.

Framing PI insurance as part of a well-rounded risk management strategy could help bring reluctant clients around to getting coverage. Think of it as their final contingency plan for when something goes wrong despite their best efforts.

2. “I can cancel my policy once the project contract ends.”

A client may move on to the next job, but that doesn’t mean the last one is completely in the past. Clients may not realise that they could be sued months or even years after a project has ended. If they’ve cancelled their Professional Indemnity policy since then, they could be responsible for thousands of dollars in compensation.

Explaining key PI concepts that clients are often unfamiliar with could help illustrate its importance to many clients. These may include:

  • Claims-made coverage – PI policies typically provide coverage when a claim is made against the policy, regardless of when the claim event occurs (as long as the policy is active). Claims-made policies are useful for SMEs who may experience a delay between when an event occurs and when a claim is made (e.g., a flaw in an architect’s plans only becomes evident later when damage and loss occurs).
  • Retroactive date – The earliest date in the past which a client is covered by their policy. Events that occurred before a policy’s retroactive date will not be covered. If your client has continuously held a PI policy, they can typically switch insurers and maintain their retroactive date.
  • Continuity date – The earliest date a client has maintained continuous insurance coverage with the same insurer. The continuity date is important because your client can have cover whether an incident occurred in the current or previous policy period as long as it occurred after the continuity date, subject to the terms & conditions of the policy. This date is not automatically transferrable if your client switches insurers, and it is essential in this situation to notify all known claims and circumstances or your client may not be covered for incidents occurring prior to the policy period.

3. “My loss is limited to the fees I charge a customer.”

Your client may not realise just how much a Professional Indemnity claim could cost them. Customers can claim more than just the fees your client has charged. Additional or related losses resulting from their professional services can also be claimed, and these often total much more than the cost of a contract.

Consider this real-life example from one of our insurer partners:

The Insured was a project manager for the construction of a group of retirement homes and an adjoining clubhouse. The claimant alleged that the Insured caused them to pay a construction invoice for subcontractor fees under the mistaken belief that the entire sum was payable and also that the amount paid exceeded the total amount payable.

The matter went to mediation, and the Insurer paid a settlement sum of $750,000 and an additional $100,000 in legal fees.

Claim examples could help your clients understand the financial importance of PI coverage. Our claims library is one source of real-life case studies, like the one above, that might help put this myth to rest.

4. “I only need Professional Indemnity cover.”

Your clients might understand the importance of Professional Indemnity insurance, but are there other exposures they haven’t considered? PI policies are often paired with Public Liability, Cyber Liability, Personal Accident & Illness, and other forms of coverage to address a variety of business exposures.

Providing clients with quotes for other policies they might consider could help them overcome their objections. The B4B platform lets brokers quote up to eight products simultaneously, so you can save time while helping your clients protect their small businesses.

BizCover for Brokers’ Professional Indemnity Offering

The B4B platform has a broad Professional Indemnity appetite, covering over 650 occupations with products from four leading insurance partners. We can accommodate limits up to $10 million and turnovers of up to $50 million for your SME and micro-SME clients.

Log in now to bind Professional Indemnity and 7 other products for your clients.



*As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained in this email is general only.  Coverage for claims on the policy will be determined by the insurer, not BizCover for Brokers, and will depend on the specific facts and circumstances involved.


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