Insurance Guide · Updated 18 May 2026
Plain-English guide to PI insurance for consultants, agencies, and freelancers — claims-made vs occurrence, limits of indemnity, run-off cover, premium drivers, sample premium tables by service type, and the major Australian insurers.
Fundamentals
Professional indemnity (PI) insurance is the core liability cover for any business that sells advice, design, opinions, or work product. The mechanics matter — claims-made wording, retroactive dates, and limits of indemnity are where most operators get blindsided.
Professional indemnity protects you against claims arising from professional services — advice, design, opinions, recommendations, or work product that the client alleges caused them financial loss. Typical covered scenarios: a recommendation that backfires, a deliverable with errors, a missed deadline that costs the client money, a confidentiality breach, alleged negligence or breach of duty.
Almost every PI policy in Australia is 'claims-made and notified', not 'occurrence-based'. This means the policy active at the time the claim is made (and notified to the insurer) responds — not the policy active when the work was done. Implication: you must maintain continuous PI cover, or buy run-off cover when you cease trading, to protect against historical work.
Every claims-made policy has a retroactive date — the earliest date of professional services covered. When you renew with a new insurer, ensure the retroactive date is preserved (or maintain a 'continuity of cover' arrangement). Loss of retroactive date is a common renewal trap that leaves years of historic work uninsured.
The maximum the insurer pays in aggregate (or per claim, depending on policy) for covered claims in the policy period. Common limits: $1M for solo freelancers, $2M–$5M for boutique consultants and agencies, $10M+ for architecture, engineering, IT integrators, and any firm serving enterprise clients. Choose to match your largest engagement size, not your average.
The amount you contribute before the insurer pays out. Typical excess: $1k–$10k for solo and small operators; $10k–$50k for larger firms. Higher excess = lower premium. Choose an excess you could comfortably absorb without affecting trading.
PI policies cover legal defence costs in addition to (or sometimes inside) the limit of indemnity. 'Costs inclusive' policies count defence costs against your limit — a $1M limit with high defence costs may leave little for settlement. 'Costs in addition' is preferable and worth the premium delta.
PI vs PL
The two policies serve different purposes and respond to different trigger events. Most service businesses need both, often bundled into a single business package.
| Aspect | Professional Indemnity (PI) | Public Liability (PL) |
|---|---|---|
| What triggers a claim | Professional services — advice, design, opinions, recommendations, work product alleged to have caused financial loss. | Personal injury or property damage caused by your business activities — typically physical events at a workplace or public location. |
| Typical claimant | Client of the service business. | Any third party — visitor to your office, person on a worksite, a member of the public. |
| Typical loss | Financial loss, professional reputation damage, consequential loss to the client. | Bodily injury costs, property repair/replacement costs. |
| Policy structure | Claims-made and notified. | Occurrence-based — the policy active when the event happened responds. |
| Run-off cover | Required when ceasing trading — typically 7 years to cover historic professional services. | Not generally needed — occurrence basis means active policies have already covered past events. |
| Typical limit | $1M–$10M aggregate. | $10M–$20M per occurrence. |
Premium Drivers
Understanding the drivers helps you brief your broker effectively and negotiate better terms. The factors below are listed roughly in order of premium impact — turnover and service type dominate, claims history and operating history modify the base rate.
Single largest premium driver. Premium typically scales 1–2% of fee income for solo and small operators, dropping to 0.4–0.8% at larger firms.
Insurers categorise services by claims experience. Tax advisers, IT integrators, financial planners, and architects face higher rates. Marketing agencies, design firms, and trainers face lower rates.
$1M → $5M might cost 1.4–1.8× the $1M premium. Above $5M, premiums become more linear with limit but availability narrows to a handful of insurers.
Each $5k increase in excess typically saves 5–10% of premium. Doubling excess can shave 15–25% — a worthwhile trade if cash flow allows the self-insured retention.
Each notified claim in the prior 5 years adds 10–30% to premium; an actual paid claim can add 50–100% or restrict cover availability. Maintain a clean record by documenting work and using SOWs.
Enterprise clients on large engagements increase rated premium; SME and consumer work attracts lower rates. Public-sector and listed-company work often demands higher limits and pushes premium up.
Work for US-based clients (or clients with US parent companies) materially increases premium because of US claims environment. Disclose all overseas work to your broker.
Firms with 5+ years of clean trading history attract better terms than new entrants. Some insurers offer 'startup' premium tranches for the first 2 years that are punitively priced.
Sample Premiums
These premium ranges reflect typical Australian market pricing for clean-claims-history operators. Your actual premium will depend on your specific service mix, client base, geographic exposure, claims history, and the broker relationship. Use as a sense-check, not a quote.
$180k turnover, no employees
Lower band assumes clean claims history and clear ICP (e.g. SME strategy work). Higher band for enterprise consulting or M&A advisory.
$120k turnover, no employees
Marketing services attract lower rates than financial or technical advisory. Add $200–$400 for cyber/privacy bolt-on.
$1.2M turnover
Adds management liability and cyber cover via package. Premium drops meaningfully at 10+ staff as volume discounts kick in.
$3.5M turnover
IT integration work is rated higher than software development. Cloud migration, ERP work, and managed services attract the highest rates.
$2.2M turnover
Architects' Board mandates minimum PI cover. Residential work attracts lower premium than commercial; high-rise projects materially higher.
$1.5M turnover
Financial advice is the highest-rated service category. AFSL conditions typically mandate minimum PI cover at higher limits.
Premiums based on Australian market data and broker research at the time of review. Movement in the broader insurance cycle (hard market vs soft market) can shift these ranges 15– 30% in either direction year-on-year.
AU Market
Most PI in Australia is sold through brokers rather than direct. Your broker will typically obtain quotes from 3–5 insurers on a panel and present the best terms. The insurers below appear most frequently on Australian professional-risks panels.
Long-standing professional risks insurer with broad SME appetite. Strong in consulting, IT, and design firms. Distributed through brokers.
Major AU general insurer with substantial PI book. Common choice for accountants, lawyers, and engineering firms. Broker-distributed.
Global insurer with strong professional risks division. Often appears on broking panels for mid-market consulting and tech firms.
Specialist underwriter focused on small-to-mid professional services. Strong in agencies, freelancers, and emerging consultants.
Global specialty insurer for larger limits ($10M+) and complex risks. Common for architecture, engineering, and large consulting firms.
Global specialty insurer with strong professional lines book. Often used for management liability + PI bundles for mid-market firms.
Lloyd's-style specialty insurer common on Australian broker panels for unusual risks and bespoke wordings.
Specialty managing general agent with appetite for smaller and emerging professional risks. Distributed through specialist brokers.
The moment a client expresses dissatisfaction in a way that could foreshadow a claim — notify your insurer. Late notification voids cover. Notification is free; the policy is voided if the insurer first hears about the issue when a formal claim is lodged.
Direct-to-insurer PI products typically have narrower wording, lower limits, and worse claims service. A qualified Australian broker (NIBA member) costs no more because the commission is paid by the insurer — and they negotiate terms you wouldn't access on your own.
Enterprise procurement teams routinely demand certificates of currency for PI and PL before contracting. Store the latest certificate in your shared drive and have your broker on speed-dial — turnaround on a certificate request can be the difference between winning and losing a contract.
If you ever cease trading — selling, retiring, pivoting — budget for 7 years of run-off cover. Premium is roughly 50–100% of the final-year amount paid annually. Many operators forget this and discover the gap only when a historic claim emerges.
Compulsory for some professions, optional for most. Compulsory categories include: tax agents (Tax Practitioners Board minimum), financial advisers (under AFSL conditions), architects (state Architects' Boards), real-estate agents (state legislation), and lawyers (Law Society professional standards schemes). Optional but strongly recommended for everyone else — most enterprise contracts require certificates of currency before they'll engage you.
PI covers professional services — advice, recommendations, work product alleged to have caused financial loss. PL covers physical events — personal injury or property damage your business activities caused. Both serve different purposes. PL is more important for trades and operators with physical premises or site work. PI is more important for desk-based consultants, agencies, and advisers. Most service businesses carry both, often bundled in a single business package.
Match the limit to your largest engagement, not your average. A solo consultant working on $10k–$30k engagements with SMEs is well-served by $1M–$2M. A boutique consulting firm pitching $100k–$500k engagements with mid-market clients needs $5M minimum. Anyone serving listed companies or government should plan for $10M+. Many enterprise clients specify required PI limits in their procurement standards — confirm before signing the contract.
Run-off cover extends PI protection for work performed before you ceased trading. Because PI is claims-made, the policy active when a claim is made responds — but if you've ceased trading, you have no active policy. Run-off cover plugs the gap. Most operators carry run-off for 7 years (Australian statute-of-limitations for contract claims). Premium is typically 50–100% of the final-year premium, paid annually. Failing to buy run-off cover leaves your personal assets exposed for years of past engagements.
Five levers, in order of impact. (1) Increase your excess — each $5k bump typically saves 5–10% of premium. (2) Document a clean risk-management story — written SOWs, engagement letters, and quality processes can earn 10–15% premium discounts. (3) Bundle PI with management liability, cyber, and PL through one broker for package discounts. (4) Shop through 2–3 brokers (Marsh, Aon, Honan, Steadfast brokers) every 2–3 years rather than auto-renewing. (5) Narrow your declared services to avoid the highest-rated categories — if you don't really do financial advice or IT integration, exclude them.
Maybe — and the answer is changing fast. Standard PI wording covers errors in your professional work product, regardless of how it was produced. However, insurers are increasingly adding AI-specific exclusions or requiring disclosure of AI usage. Newer policies often distinguish 'AI as a tool' (covered) from 'AI as the deliverable' (often excluded). If you use AI tools meaningfully in your service delivery, disclose it to your broker and confirm cover in writing. The AI exclusion clause is the fastest-evolving area in AU PI wording.
OneBookPlus brings SOWs, time tracking, invoicing, and client records into a single Australian platform — so your PI risk-management story is documented and your broker can negotiate better terms.
Last reviewed and updated: by Bishal Shrestha
About the author
Founder & CEO, OneBookPlus
Bishal has over a decade of experience in digital marketing, web development, and small business consulting across Australia. Bishal has reviewed PI policy schedules and run-off cover for Australian consultants, marketing agencies, and tech freelancers.
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