Australian Human Resources Institute

Professional Indemnity Insurance

Practicing as a human resources professional in today’s financial world can be both exhilarating, and at the same time volatile. Exposure to expensive, time-consuming litigation from disgruntled clients is a real threat. It is crucial that every human resources professional ensures his or her activities are covered by a professional indemnity insurance policy.

The Australian Human Resources Institute has negotiated an exclusive professional indemnity insurance facility, through Austbrokers Countrywide, that offers very competitive discounted rates for human resources professionals.

1. What protection will a professional indemnity policy provide?

A professional indemnity policy aims to shield the professional’s assets in the event of a claim, ensuring that he/she is able to carry on their business. Every policy on the market is different. You need to compare each policy to determine what is best for your individual needs.

2. What is a claims made policy? How does it differ from an occurrence policy?

A ‘claims made’ policy requires all claims to be notified to the insurer within the period of insurance. The actual mistake could occur at any time, if there is unlimited retrospective cover, or otherwise it must occur during the period of insurance. The insured must not have had any prior knowledge of a fact, situation or circumstance before the period of insurance, which relates to a claim which may be made against the insured.

Claims arising from a ‘known circumstance’, occurring prior to the period of insurance, are normally excluded from a ‘claims made’ policy.

In an occurrence wording (as for Public Liability policy wordings), the circumstance must occur during the period of insurance whilst the notification of this event can occur at any time subsequently.

3. What does a civil liability professional indemnity wording cover?

A civil liability professional indemnity wording will indemnify the insured for claims arising from any civil award imposed by a civil court, as opposed to criminal liability or penalties enforced by a criminal court. A civil liability professional indemnity wording broader than a negligence wording, as it will indemnify the insured for claims arising from strict liability, where no negligence is involved.

Some Professional Indemnity Insurance cases

Breach of copyright/trademark

Unknown to the insured, one of its employees had copied and used an overseas company’s product. Copyright to the product was owned and registered by the overseas company. The new product was then marketed and sold. The overseas company, after becoming aware that this derivative version was being sold in the local market, brought a claim against the insured alleging breach of copyright and loss of profits and reputation.

Misleading and deceptive conduct/ Trade Practices Act

A consultant alleged not to have ensured all necessary sign off’s when the ACCC investigated a television advertisement containing misleading information.

Misrepresentation

The claimant alleged it relied upon misrepresentations made by the consultant regarding a fundraising contract. This included amounts of money that would be raised, timeframes and failure to achieve outlined goals. The failure to provide progress reports to the claimant to act as a warning about missed performance targets.

Defamation

Comments made on a website over a competitor's activities lead to an action of defamation. Product comparison commentary also led to allegations of misrepresentation.

Defamation

A woman’s business name, home address and telephone number was wrongly inserted in the Escorts section of the 1997 Yellow Pages. The complainant alleged that because of this error she had received a number of visitors and telephone calls to her home seeking sexual services. Women seeking work in the sex industry had also visited her. She had developed anxiety and depression for which she had been prescribed medication. She alleged 1.6 million copies of the Yellow Pages has been distributed to all states and territories and published on the internet.

The complainant was awarded compensatory, aggravated and special damages in excess of $180,000 plus costs (Fitzgerald vs Pacific Access Pty Ltd, Sydney, November 1999).

For more information, please complete the form below and a member of our team will contact you to further discuss your specific insurance requirements.