What does PI insurance actually cover?

PI covers: claims of negligence, errors or omissions in your professional work, breach of professional duty, intellectual property infringement in your work, loss of documents, defamation (in some policies), and legal defence costs. It does NOT cover: intentional wrongdoing, criminal acts, or bodily injury (that's public liability).

Do I need PI insurance if I'm a contractor?

Almost certainly yes. Most clients require contractors to hold PI insurance before engaging them. Even without a contract requirement, as a contractor you're providing professional services — if those services cause your client a financial loss, you're personally liable.

§ Tool · tier 2 · independent

Professional Indemnity Insurance Calculator.

Estimate professional indemnity insurance costs for Australian professionals. Protect against claims of negligence, errors, and bad advice.

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Professional indemnity (PI) insurance protects you against claims of negligence, errors, omissions, or bad advice that cause your client financial loss. In Australia, PI insurance is mandatory for many professions (lawyers, financial advisers, real estate agents, engineers, architects) and increasingly required by clients in contracts. Even if not mandatory, a single claim without cover could bankrupt a small practice.

§ Worked examples

Real-world scenarios

IT Consultant, Solo

Solo IT consultant, $180,000 revenue, $2M cover, no claims.

Estimated premium: $800-$1,500/year. If a software implementation error causes a client $500,000 in lost revenue, the claim + legal defence could easily exceed $700,000. Without PI, that comes from your personal assets.

Small Accounting Firm

5-person accounting firm, $800,000 revenue, $5M cover, no claims.

Estimated premium: $4,000-$8,000/year. Mandatory for Tax Agents. A tax return error leading to ATO penalties and interest for a client could trigger a $200,000+ claim. PI is non-negotiable.

§ FAQ

Questions Australians ask

§ Glossary

Plain-English definitions

Professional Indemnity (PI)

Insurance covering claims of negligence, errors, or omissions in professional services that cause financial loss to clients.

Claims Made Policy

A policy that covers claims made during the policy period, regardless of when the work was done. Requires continuous cover without gaps.

Run-Off Cover

Extended PI cover after you stop practising, protecting against claims from past work. Typically needed for 7+ years.

§ Pair it with

Related tools

Business Structure Advisor

Choose a structure that limits personal liability.

Business Loan Calculator

Finance PI insurance premiums.

How to use

01Select your profession/industry.
02Enter your annual business revenue.
03Choose the cover limit you need.
04Add your number of employees.
05Indicate any claims history.
06See estimated premium range and recommended cover.

Key info

PI insurance is mandatory for: lawyers, financial advisers (AFSL), accountants (Tax Agent), real estate agents, engineers (in some states), and architects.
PI insurance is 'claims made' — it covers claims MADE during the policy period, regardless of when the work was done (if retroactive cover is included).
After you stop trading or retire, you need 'run-off' cover for 7+ years — past clients can still claim.
Premiums typically range from $500-$5,000/year for small practices; $5,000-$50,000+ for larger firms.

Pro tips

Check your registration body's minimum requirements — some mandate $2M+ cover.
Always include retroactive cover back to your first day of practice — claims can arise years after work was completed.
Many client contracts now require PI certificates before engaging you — losing a contract because you don't have cover is expensive.
Bundle PI with public liability and cyber liability for a comprehensive business insurance package.

Avoid these

Thinking PI is the same as public liability — PI covers financial loss from bad advice/errors; public liability covers physical injury/property damage.
Letting the policy lapse — PI is 'claims made', so gaps in cover mean past work isn't protected.
Not getting enough cover — a $500,000 policy might not cover a single large claim including legal defence costs.
Not disclosing all services — if you expand into new services not listed on the policy, claims may be denied.

Disclaimer: Estimates only. Interest rates, fees and policies change frequently. Always verify with lenders directly. General information, not personal financial advice.

Last updated · May 2026