Insurance for Inspectors: PI, Public Liability, and the Limits of Disclaimers

Professional Indemnity insurance is a mandatory condition of licensing for building inspectors in most Australian states, but the existence of a policy is not the same as good cover. A few details matter.

Policies are almost always claims-made, not occurrence-based. That means the policy that responds is the one in force when a claim is made, not the one in force when the work was performed. If you change insurers, the new policy normally needs a retroactive date that covers your historical work, otherwise you have a gap.

Run-off cover is the insurance you need after you retire or close the business, to continue covering historical work against late-arising claims. Without run-off, a defect claim that appears two years after you stop trading has no insurer to turn to.

Disclaimers in inspection contracts have limits. Australian Consumer Law non-excludable consumer guarantees apply to inspection services under $100,000, and to some services over that threshold where the service is of a kind ordinarily acquired for personal, domestic or household use. The unfair contract terms regime in ACL Part 2-3 further restricts what standard form contracts can exclude for consumers and small businesses.

Limitation of liability clauses must be conspicuous to be enforceable. Buried in the back of a terms document, they usually fail.