NTAA Professional Indemnity Insurance
General Insurance
InterPrac specialises in Professional Liability Insurance
and Personal Insurance for NTAA Members
Property and Liability Insurance
Property Insurance
Property risk relates to the risk of property being damaged, or loss or destruction of that property.
There are two distinct losses associated with property risk: direct and indirect.
- A direct loss refers to the actual damage or loss of the property
- An indirect loss is a loss that is incurred as a result of the damage to the said property. This is sometimes referred to as a consequential loss.
Example
Selena owns a small candle making business. She owns the factory she works out of and it contains valuable specialist equipment. One Sunday, whilst the factory is closed, an electrical fire completely destroys the factory, her equipment and her stock.
The destruction of the factory, her equipment and her stock is considered a direct loss as this is damage to the property.
The indirect loss for Selena is her loss of income, possibly loss of staff, and expenses incurred in rebuilding her business.
How could this be avoided or controlled?
It is highly unlikely this risk could have been avoided unless it was through negligence or lack of electrical maintenance.
The loss can be minimised through building and contents insurance.
Liability Insurance
Liability risk is a loss associated with legal liability, and is usually a result of our actions or inactions which result in loss, damage or injury to another person or their property.
Legal liability can arise under: Negligence (common law); Enforcement of an Act of Parliament such as product liability (statute law); or by a legal agreement (contract law).
Example
Cameron is one of Sydney’s finest martial arts instructors. He runs a specialist training gym where he holds nightly classes in self-defence. During one of these classes a young student, whilst sparing with another student, injures his spine, paralysing him from the waist down. The student and his parents decide to sue Cameron for professional negligence.
Cameron hires a team of lawyers to provide a legal defence which ends up costing hundreds of thousands of dollars.
How could this be avoided or minimised?
Risk avoidance could only occur by not having students or to watch every activity in the gym. Again avoidance of this is not practical.
The risk of financial loss could be minimised through general insurances such as Public Liability insurance.
Personal Insurance
Personal risk is where the individual is affected by events such as death, illness or injury, which may result in a loss or cessation of income. Consequently the client and any dependants will likely suffer a decline in their standard of living, and their ability to invest or create wealth for their future will also be comprised. It is also likely additional expenses will be incurred, e.g. medical expenses.
Example
Joshua has two young children and a stay-at-home wife. They have a mortgage of $200,000 and he works as a gardener and is the sole income earner for the family.
Joshua suffers a stroke and is in a coma for three months. During this time, the only income available to the family is that from Centrelink which is considerably lower than his pre disability income.
They are unable to meet the mortgage repayments and forced to draw on their savings for food, medical expenses and other essentials.
How could this be avoided or controlled?
It is difficult to control or avoid a stroke as it is not necessarily something you will receive any warning signs on.
The loss could have been minimised through self insurance if the clients had substantial savings allowing for the loss of income and medical expenses. The most effective option would be to insure against loss of income and critical illness.