What Is Professional Indemnity Insurance?
Professional indemnity (PI) insurance protects tradespeople, consultants, and professionals against claims arising from negligent advice, design errors, omissions, or failures in the services they provide. If a client suffers financial loss because of a professional error — such as an engineer’s incorrect structural calculation or an architect’s non-compliant design — PI insurance covers the cost of legal defence and any compensation awarded.
Who Needs It?
PI insurance is particularly relevant for professionals who provide advice, design services, or certifications in the building industry, including:
- Building designers and architects — errors in plans or specifications
- Engineers — structural, civil, or geotechnical design faults
- Building surveyors and certifiers — incorrect compliance assessments
- Energy assessors — inaccurate energy ratings
- Project managers — oversight failures leading to cost blowouts or delays
While trade contractors (plumbers, electricians, builders) primarily carry public liability insurance, those who also provide design or advisory services may need PI cover as well. Some licensing bodies require PI insurance as a condition of registration.
PI vs Public Liability
| Feature | Professional Indemnity | Public Liability |
|---|---|---|
| Covers | Financial loss from professional errors | Physical injury or property damage |
| Trigger | Negligent advice, design fault, omission | Accident or incident during work |
| Typical claim | Client sues over faulty design that costs $50K to fix | Third party trips over equipment on site |
| Required by | Many professional registration bodies | Most licensing bodies and contracts |
How It Relates to Licence Verification
Some licensing bodies require PI insurance as a condition of maintaining registration. While TradieVerify focuses on verifying trade licences, confirming a tradie’s licence is current is your first assurance that they meet minimum insurance requirements set by their registering authority. For high-value design or advisory work, always ask for a copy of the PI certificate of currency directly.