Professional Indemnity Insurance Basics: A Guide for Complementary Therapists

Did you know: If a client believes their injury was caused by your professional services, you could be held liable? Perhaps you have heard of professional indemnity insurance before, but what exactly does it mean? What does it cover? And how do you determine if you need it? 

To help you make an informed decision in choosing cover that’s right for you and your holistic therapy practice, this guide aims to address your burning questions about professional indemnity insurance. 

Let’s take a look...

What is Professional Indemnity insurance (PI)? 

Professional indemnity insurance protects you against allegations or claims of financial loss due to injury or damages that have resulted from a negligent act, error, omission, malpractice or breach of duty that has arisen out of your professional duty. This means that if a client files a claim against you because they believe it was due to a failure of your professional services, PI insurance could provide cover.  

Examples of claims might include:

• acting in a negligent manner
• making a mistake
• excluding something you shouldn’t have, or
• not working to an expected level of professionalism.

In the event of a claim or allegation, PI could help with your legal defence and pay for claims made against you. It could also cover the cost of patient compensation or damages.

Tip: Practise effective note taking. In the event a claim is held against you, having excellent notes of past client appointments can help you recollect what happened and provide evidence if a claim is held.

Who needs Professional Indemnity insurance? 

Professional indemnity insurance is in some cases a requirement of your registration. If it’s not a requirement, a good rule of thumb is that if you interact with patients or clients on a regular basis, having comprehensive cover is a good way to help protect you while working. As a complementary therapist, you may face situations where your patients look to hold you responsible for injuries they believe are due to your professional services. This is where professional indemnity insurance could step in.

What other details should I know about Professional Indemnity insurance? 

When reading a Policy Wording you might find the below elements mentioned. Here is your cheat sheet to understanding what they mean. 

Exclusion
Things that are not included as part of your policy. 

Claims-made and reported basis 
This means the policy only responds when a claim is made, if you have cover. The cover you have at the time of the claim is the one that will respond when a claim is made, regardless of when the incident occurred. There are conditions to this type of cover, so please ensure you read your policy wording for full details. 

Policy period 
The time between the policy starting and ending. 

Run-off cover 
Run-off cover may protect you for any past activities after you have ceased all professional services. This means cover could continue, even if a claim arises after you’ve stopped working or retire. Be sure to review your Policy Wording or speak to your broker to check the details, as some cover might only provide run-off cover if you retire, or you have activated the cover. 

Policy Wording 
Your Policy Wording sets out the terms and conditions of the insurance contract, including any exclusions, limitations, deductibles, or coverage extensions that may apply. In the event of a claim, such terms and conditions may limit the amount payable or exclude coverage. Your policy wording should be read in conjunction with your Schedule (which outlines specific limits applicable). 

Retroactive cover 
This refers to cover for services you provided before the policy start date. This may or may not be included in your policy. To check, refer to your Policy Wording and/or Schedule. 

Scope of practice 
Everything you do in your profession is governed by a scope of practice. This refers to everything you’re qualified or registered to do while working. Your policy coverage is usually linked to you working within an agreed scope of practice.  

How can BMS help? 

BMS is the official insurance broker for Australian and New Zealand IICT members. As an IICT member, you have exclusive access to professional indemnity insurance designed for complementary therapists, and access to a range of additional insurance solutions to cover you and/or your business. 

Learn more about IICT’s trusted insurance partner BMS or IICT’s insurance program. 

In arranging this insurance for our members IICT is acting as a distributor of BMS Risk Solutions Pty Ltd (BMS) AFSL 461594, ABN 45161187980 (AUS members) and BMS Risk Solutions (NZ) Limited (BMS), FSP 696531, NZBN 9429047279339 (NZ members). The insurance is issued by BMS under binder with Certain Underwriters at Lloyds. When acting under a binder BMS acts as agent for the insurer and not as your agent. This is general advice only and BMS has not considered whether it is suitable for your particular objectives, needs or financial situation. Please read the Policy Wording, Financial Services Guide (AUS members) and any Disclosure Statement (NZ members) before making a decision about purchasing this policy.

Article written by: BMS

The BMS group provides cover to more than 700,000 healthcare and regulated professionals through 100+ associations across Australia, Canada, Europe and New Zealand. This experience gives BMS the ability to create and deliver significantly continuously evolving member centric insurance programs. This includes ensuring broad, market-leading coverage, evidence-based risk management and exceptional member service.