Frequently Asked Questions
What kind of insurance is best for my client's business?
Every business is different. Even if your client is doing the “same” job as someone else, there could be subtle differences that could make all the difference in an insurance claim. This is why Woodina recommends that the services of an insurance broker are used to assess a client’s insurance needs and find the right cover at the right price. This is especially true for Professional Indemnity (PI) and Information Technology Liability (IT) insurance, as there are many variables that can impact policy coverage.
If you do not have an insurance broker, you can find one by using the following link: https://www.needabroker.com.au/.
What types of insurance does Woodina offer?
Woodina specialises in PI, IT, SME, and General Liability (GL).
What is PI insurance and who should have it?
What is it: Insurance to protect a professional against claims by third parties that have relied or purported to have relied on the professional’s advice or service, including designs and specifications. The insurance covers investigations, defence costs and settlements. It is important to note that you do not actually have to do something wrong for someone to try and sue you, they just need to think you have done something wrong.
Who should have it: Any person or business that provides advice, design, specification, or services that are relied upon by another party.
What is IT insurance and who should have it?
What is it: Insurance to protect an IT professional or contractor against claims by third parties that have relied or purported to have relied on the professional’s provision of advice, service, or provision of computer hardware or software including designs and specifications. The insurance covers investigations, defence costs, and settlements for financial loss, bodily injury, or property damage.
Who should have it: Any IT related business that provides advice, design, specification, or IT related products to another party.
What is GL insurance and who should have it?
What is it: Insurance to protect a person or business against claims by third parties brought against them where they feel the person or business is responsible for their bodily injury or property damage. The insurance covers investigations, defence costs, and settlements.
Who should have it: Any business that may come into contact with another person or their property.
What is small and medium enterprise liability?
What is it: Small size enterprises are companies with fewer than 50 employees, and medium size enterprises are ones with fewer than 250 employees. This is insurance for businesses that secures and safeguards from liability claims and property risks. SME insurance protects a business’s assets, operations, net worth, and reputation.
Who should have it: Any small business requiring broad coverage for their company.
What is Woodina’s target market?
Woodina’s target market is individuals, right through to small and medium enterprises, generally up to $10m in fees.
A small size enterprise is a company with fewer than 50 employees.
A medium size enterprise is a company with fewer than 250 employees.
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Historically, only people with a tertiary or university qualification such as doctors, lawyers, and accountants were considered professionals. These days, it is anyone who derives their income from their specific knowledge or experience, but insurers generally look for qualifications as well as experience.
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The retroactive date is the date from which acts committed by a professional will be covered by a PI policy. The retroactive date often pre dates the commencement date of the policy to provide cover for claims that arise from acts or omissions taking place prior to the commencement date of the policy. This is very important for claims made policies like PI and IT Liability. In this regard, you should refer to the FAQ “What is a “claims made and notified” policy? How does it differ from an “occurrence” policy?” for further information.
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Continuity of cover is essentially a means of providing capacity to an insured when moving from year to year with the same insurer, or from one insurer to another. If a professional who was insured for successive insurance periods with the same insurance company notifies the insurer of a claim or circumstance that should have been notified in an earlier policy period, that claim will be covered under the latter policy period. It will be subject to the lowest limit of indemnity of the two applicable policies, and any non-disclosure issues and known circumstances exclusions will not be raised. Prejudice due to the delayed notification may be taken into account in the adjustment of the claim.
Similarly, if a professional changes from one insurer to another, and the new policy has a continuous cover clause, the new insurer will not decline a claim because it should have been notified to the previous insurer, but can benefit from any terms of the previous policy which would reduce the insurer’s liability.
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The limit of indemnity in a PI policy is a limit on the total amount to be indemnified for all claims in the policy period. The automatic reinstatement allows this total amount to be applied again once the first limit is exhausted, for a separate claim or claims.
An example is a policy with a $2,000,000 limit of indemnity with one automatic reinstatement. This allows the insured to be covered for numerous paid claims during the policy period, as long as none are greater than $2,000,000. If the entire limit of $2,000,000 is utilised, then the reinstatement caters for additional claims. For example, the insured could be covered for a first claim of $2,000,000 and then two additional claims of $1,000,000 each.
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Territorial limits refer to the place where the act, error, or omission occurs. The jurisdiction refers to the country, state, or territory where the legal action will take place.
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A costs in addition limit, also referred to as a “costs outside of limit”, means that claims defence costs are paid in addition to the policy limit. Such costs do not erode the limit payable for monetary damages paid on the claim. Such defence costs “in addition” are usually limited to an amount not greater than the policy limit.
A costs inclusive limit means that defence costs are deducted from the policy limit, which then reduces the overall limit available to pay for monetary damages.
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A costs inclusive deductible means that the deductible paid by the insured on a claim applies to costs incurred by the insurer to defend the claim.
A costs exclusive deductible means that defence costs do not erode the deductible, and therefore is better for the insured.
Woodina’s deductibles are generally costs exclusive deductibles because Woodina bears the cost of time spent by its inhouse solicitors, claims managers, and administrative staff at Woodina Law.
Woodina Law handles all of Woodina’s PI, IT, and GL claims. The deductible is only eroded by disbursements such as counsel and expert fees.
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Absolutely. We generally quote up to 30 days in advance of the policy inception date. If we quote more than 30 days before, we need a No Claims Declaration signed within 30 days of the inception date.
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We offer a minimum 12 month policy but to assist our clients, we can also provide a policy of up to 18 months.
In certain cases, we will also accept a 9 month policy term.
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PI insurance is a claims made and notified policy. This means that any fact, situation, or circumstance that may result in a claim needs to be notified to the insurer within the period of insurance. The actual alleged error can occur at any time in the past since the business started if there is full “unlimited” retroactive cover under the policy. If there is no retroactive cover (such as with a start up operation) then the error or alleged error must occur during the period of insurance, and the insured must not have had any prior knowledge of the fact, situation, or circumstance before the period of insurance.
GL insurance, on the other hand, is an occurrence policy. This means that the fact, situation, or circumstance that may result in a claim can occur at any time in the past, so long as the notification of the fact is made on the policy that was in existence at the time of the cause of the claim. For example, a 1980 GL policy might respond to a lung cancer claim notified now, caused by working with asbestos in 1980.
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Email us at proposals@woodina.com.au and we will discuss your requested changes. If you are increasing the policy coverage, an extra premium may be payable by you. Alternatively, if you are reducing the amount of cover, a return premium may be payable by us.
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You may cancel the policy at any time in writing to us. Upon receipt of such a request, if there have been no claims, we will retain a monthly pro rata proportion of the premium up to the date of cancellation. We will retain the original administration fee (if applicable) applied at the inception of the policy.
If there have been any claims made under the policy, no refund shall be given.
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Run off cover protects a business which has ceased operating from claims resulting from services provided while it was previously operating. Such insurance is underwritten on a “claims made” basis (only covers claims made while the policy is in force, regardless of when the act took place). Most professional associations require their members to continue with run off cover after ceasing operations for 6 or 7 years, in case a claim is lodged at some time in that future period (which is linked to the limitation period at law in which a legal claim can be brought).
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There are two ways in which run off cover can be facilitated, on an annual basis or on a multi year basis.
1) Annual basis:
The advantages of an annual run off policy are:
It provides a fresh policy limit each year;
Matters that the insured has become aware of but has not yet notified, can be prompted with the yearly “No Claims Declaration” that is signed by the client.
The disadvantages of an annual run off policy are:
It requires a new “No Claims Declaration” to be completed each year;
It requires a premium payment each year, so funds need to be retained from the closed or sold business to meet this expense; and
The availability of the policy each year is dependent on the insurer not having premium rate or risk acceptance criteria changes.
2) Multi year basis:
Advantages of a multi year run off policy are:
It requires a one off “No Claims Declaration” to be completed prior to the commencement of the cover – so no ongoing annual paperwork;
It requires a one off premium payment at the commencement of the cover – so no funds need to be retained as there is no ongoing premium cost; and
It is not subject to any future changes in the insurer’s premium rating or risk acceptance criteria.
Disadvantage of a multi year run off policy is:
It is one stretched aggregate limit across the extended policy period – so not a fresh policy limit each year.