For many professional services businesses, the biggest risks aren’t necessarily the ones you can see.
Your business may operate from an office with a team and a collection of laptops, but what would happen if a client alleged your advice caused them financial loss? What if a claim arose from the way the business or its people were managed? How would your business respond if its systems or data were compromised by a cyber incident?
For consultants, accountants, engineers, agencies and other professional services businesses, there are several areas of risk worth considering when reviewing your insurance arrangements.
What if a client says your advice caused them a loss?
When clients rely on your expertise, an alleged mistake, omission or failure to provide an expected service can potentially lead to a claim.
For example, an accountant may make an error calculating a client’s payroll tax obligations, resulting in unexpected costs. The client could allege the error caused them financial loss and seek compensation. Even if the claim is disputed, legal defence costs may still arise.
“This is where Professional Indemnity, known as PI insurance, may respond,” says Mick Alexander, Managing Director of HIB Insurance Brokers. “Depending on the circumstances and policy terms, it can provide cover for certain claims and defence costs arising from professional advice or services a business provides””.
According to business.gov.au, Professional Indemnity insurance may help cover legal action arising from claims involving professional advice or services. It is also mandatory for some professions. The type and level of cover required will depend on your profession, the services you provide and your individual risk profile.
What if the issue is how your business is managed?
Not all business risks come from the work you provide to clients. Some arise from the way the business itself, or its people, are managed.
While Professional Indemnity relates to claims arising from the professional advice or services your business provides, Management Liability generally responds to certain claims arising from the management of the business and its people.
Depending on the policy, Management Liability may include cover for areas such as:
– Directors’ and Officers’ Liability
– Employment Practices Liability
– Crime, and
– Statutory Liability
For example, a claim may arise if an employee alleges they were unfairly treated during a promotion process or experienced bullying or harassment in the workplace.
Management Liability policies can be complex, so it’s important to understand what is and is not covered. Business.gov.au recommends discussing policy options with an insurance broker or authorised insurer.
How would your business respond to a cyber incident?
“Cyber risk isn’t just a big business issue”, Mick says. “Most professional services businesses hold information that is valuable to cybercriminals, including client details, financial records, confidential documents and login credentials. A business doesn’t need to be large to become a target”.
The Australian Signals Directorate’s Australian Cyber Security Centre received more than 84,700 cybercrime reports in FY2024–25, or around one every six minutes. The average self-reported cost per cybercrime report reached approximately $56,600 for small businesses and $97,200 for medium businesses.
Depending on the policy, Cyber Insurance may provide cover for certain costs associated with a cyber incident, including:
– Responding to a data breach
– Cyber extortion
– Data recovery
– Business interruption
– Forensic investigation
– Legal and notification expenses
Importantly, Cyber Liability insurance doesn’t replace good cyber security. Prevention, staff awareness and an incident response plan remain important parts of managing cyber risk.
What about your physical business?
Professional risks may be less visible, but the physical side of your business still matters.
If you rely on computers, servers, printers or other equipment to keep your business running, it’s worth considering what would happen if they were damaged, stolen or unable to be used following an insured event.
Depending on the insurer and the policy selected, a Business Pack or Office Pack may provide a combination of covers such as:
– Property and contents
– Business interruption
– Theft
– Glass
– Electronic equipment
– Public liability
The cover you need will depend on your business, the equipment and property you rely on, and the risks you face.
Looking at the whole risk picture
Professional services insurance is not necessarily about choosing one policy. It’s about understanding how the different risks within your business fit together.
Mick explains: “Professional services businesses often have risks that aren’t immediately visible. It’s not just about protecting the office or its contents. It’s also about considering the advice you provide, the people responsible for managing the business, the information you hold and how the business would respond if something went wrong. Looking at the complex risk picture can help identify gaps that may be missed when policies are considered in isolation”.
HIB Insurance Brokers combines professional insurance expertise with local knowledge to support businesses in Albury Wodonga and beyond.
If it’s been a while since you’ve reviewed your business insurance, talk to the HIB team or call (02) 6041 1488.
Disclaimer: This article provides general information only and does not consider your individual circumstances. Insurance cover is subject to policy terms, conditions and exclusions. Speak with your broker to discuss your insurance needs.