In today’s volatile property sector everything is on the move; the real estate advice you provide today could prove risky tomorrow.
Like all other professionals, you have a duty of care to clients who expect a reasonable degree of skill, competence and ability. Most often that is exactly what is delivered, however not everyone is infallible and in volatile sectors particularly, whether through error, omission or breach of professional duty, problems can arise leading to clients seeking redress.
That’s where Professional Indemnity (PI) insurance comes into effect. For some professionals and Franchise Groups, PI coverage is compulsory and a condition of licensing or registration. Even where it is not compulsory, PI cover just makes sense; and savvy real estate agents regularly review the PI policies they hold to ensure they are fully protected now and in the future.
Because PI policies are written on a “claims made” or “claims made and notified” basis, effective coverage is essential. This is even when you or a member of your team takes parental leave, a sabbatical, or retires – the statute of limitations on a PI claim is seven years. PI protection is an important investment in your peace of mind and prosperity.
In the firing line
Couldn’t happen to you? Think again.
When a balcony railing collapse led to a 22-year-old tenant suffering serious spinal injuries, the property manager was blamed for failing to spot the defect during infrequent and inadequate inspections.
Unable to return to his previous job, the young tenant is retraining for a different role — seeking damages of more than $750,000.
Meanwhile, in a separate case, the marketing collateral for a Brisbane penthouse clearly showed a storeroom, and included it in the floor space calculations. However, when the buyer moved in the storeroom was revealed to be part of the building’s common property. A claim of more than $100,000 was demanded by the claimant, and a confidential settlement was agreed between the parties to pay damages around that sum.
Without effective PI cover, these professionals would have endured even greater anguish.
Aon’s PI practice leader, Mary-Catherine Thomas, warns that without effective PI cover professionals risk exposing their balance sheet to significant claims. Some professions, particularly construction, are facing mounting litigation, she says, but no profession is immune.
“The moment you provide advice or a service, you have an exposure. When it comes to investing in PI it comes down to risk tolerance — how much you are prepared to hold versus insuring it?”
Overlooking PI can prove costly: “If you don’t have PI and there is a claim from a client, then you will wear that 100 per cent on your balance sheet. If you do have PI then it covers you for any act, error or omission that an employee or organisation is deemed to have undertaken.”
Like any insurance cover there are benefits from a regular review, and by working with an experienced insurance broker, professionals can benchmark current cover against the growth of your business, general market conditions and emerging trends to ensure effective protection.
“Just because you earn a $50,000 fee doesn’t mean you can’t have a $20 million claim,” she warns.
Without effective PI how would your balance sheet fare?
Aon’s professional promise
Aon provides innovative tailored solutions to our clients across all professions. Our deep industry knowledge and experience ensures we are our clients’ trusted advisors, providing expert advice and solutions for professionals in real estate at every stage of their career.
Plus, for a limited time only, get 15 months cover for the price of 12 when you contact the expert team at Aon to take out Professional Indemnity Insurance.
* Conditions and eligibility criteria for the offer apply. Offer open to all new policies taken out before 30 September 2017. For full policy wording please contact 1300 734 274. © 2017 Aon Risk Services Australia Limited | ABN 17 000 434 720 | AFSL 241141. This information is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered.