Professional Indemnity Insurance

Rosy Sullivan

All of the trainers at the Australian College of Professionals have reported back that in almost every CPD workshop they have conducted over the past month, the topic of professional indemnity insurance has been raised as a question.  We have written before in our College Chronicle about the regulation making it mandatory for agents to hold professional indemnity insurance, but this time, we write about a specific requirement for your insurance policy.

In almost every situation, this has been because the agency has been visited by investigators from NSW Fair Trading and one of the documents that they have requested to view is the agency’s policy for professional indemnity insurance.

It should be noted that under the Property, Stock and Business Agents Amendment (Professional Indemnity Insurance) Regulation 2012, that the new clause 13B of the regulation, which commenced on 1st January 2013, required licensed agents to hold professional indemnity insurance. 

Now most agents knew about this, so why you ask has it become such a hot topic in CPD workshops. The reason is that a number of agencies have been directed to amend their insurance policies because they do not meet the requirements of the Regulation.

The requirement for mandatory professional indemnity insurance applies to all active licence holders under the Act. There are exemptions for licence holders who are not engaged actively in the property industry as an agent.

The big issue under question relates to the following clause:

“The regulation requires policies to provide a minimum level of indemnity coverage of not less than $1 million for any one claim; and not less than $3 million in the aggregate, for all claims made during the period of insurance. These indemnity amounts are inclusive of costs incurred or payable by the claimant, in connection with any claim”


The Regulation further states that the policy must also provide cover for civil liability (including for personal injury) that arise from the conduct of an agency business, including:

Liability arising from acts or omissions of the licence holder (or their employees, agents or other persons) that constitute negligence, unintentional misleading or deceptive conduct, breach of professional duty, unintentional defamation, or unintentional interference with intellectual property rights

Remember that this requirement came into force on 1st January 2013 (17 months ago) and that your policy should address all of the requirements. Check your policy now and make sure that not only the above has been addressed, but that all of the commission-only contracted agents either hold their own insurance or are included into the agency’s policy.

It’s time to talk to your insurance broker.