Well, many consultants or contractors make the common mistake of thinking they are automatically covered under the principal’s professional indemnity policy. When we use the term ‘principal’, we’re referring to the company who engages the consultant to do the work for them. A word of warning, any professional who’s working on a contract basis shouldn’t assume that the principal is covering them.
if you make a mistake, what would be the cost to rectify the problem?
Furthermore, it’s not always in the principal’s best interests to cover the contractor or consultant. For example, a claim may begin with the principal being sued. However, it may not finish there. Why? You see, the principal (or their insurer) may want to seek to join the contractor as an additional party to the claim. In a way, the principal is protecting their position and seeking to transfer the liability to the contractor. As a consultant, you alternatively may not exercise the required level of care. Instead, it’s the principal suing you.
For a contractor, or freelance professional, the best way to mitigate or control the risks is to buy PI insurance. However, if you’re still unsure you need PI insurance, we advise checking our some of our previous articles:
Okay, by now you should understand that as a consultant or contractor you must have your own professional indemnity insurance. But, what limit of indemnity do you need?
Not all consultants, contractors or freelance professionals are the same. Make note, exposures vary. Therefore, so will the professional indemnity limit. As a result, consider carefully what limit is right for you.
For your convenience, FD Beck has a free online insurance quoting tool tailored for contractors, consultants and freelance professionals. Our online calculator has almost 150 professional occupations to choose from. What’s handy, is that FD Beck’s online PI insurance calculator offers limits options of $500,000, $1,000,000, $2,000,000 and $5,000,000. Better still, our online calculator includes other products such as Public Liability and Cyber Insurance. That’s just to name a few.
For over 100 years, FD Beck has protected Australians. Rest assured, we have the knowledge and expertise to handle every aspect of your insurance needs.