Some advice from leading industry Trainer & Auctioneer Brian Cannan & specialised Real Estate legal practitioner Greg Jemmeson on Professional Indemnity.
Brian Cannan: We're here with Greg Jemmeson from Jemmeson & Fisher Solicitors & Accountants. Good afternoon Greg.
Greg Jemmeson: Hi Brian
Brian: All right, well I think it's time to talk about professional indemnity! Every real estate agent has to have professional indemnity. Tell me what they need to do.
Greg: Okay Brian, look professional indemnity is an essential business insurance that every business should have regardless, however under the Property Stock and Business Agents Act regulations there is now requirement for every business to have professional indemnity insurance and when I say it's for a licensee that is the business not the individual employees or licensees in charge. Now these policies cover things such as negligence misleading and deceptive conduct breach of professional duty and for staff fraud. Okay, now most standard insurers will be able to provide the adequate policies and of course when you go to your broker you need to tell them that is professional indemnity insurance which must comply with the Fair Trading requirements.
Brian: So if I'm an employee, my employer will get professional indemnity and then I will be covered?
Greg: That's correct.
Brian: But if I'm a contractor, we've talked about before an independent contractor with my own company, I'd have to get my own professional indemnity insurance?
Greg: That is correct.
Brian: Could you be connected with the company's professional indemnity insurance?
Greg: I know that happens in certain cases however if you are truly an independent contractor you should have your own insurance. By linking the independent contractor with the businesses insurance it takes away the independence and is not as independent as it should be. One of the other things to consider is these days a lot of agencies run their rent roll/property management in a separate company and a sales in a separate company what they need to do is if they have one professional indemnity policy both of those entities need to be named on the same policy.
Brian: And what to fair trading look for when they come into your office about professional indemnity?
Greg: Okay, obviously they want to see that you have a certificate of currency, that all of the entities that operate from that office have a policy or are all covered on the one note and it's a general compliance strategy of Fair Trading along with other things they look at but they are checking that each office has professional indemnity insurance at the moment a couple of things that people need to take into account is that professional indemnity policies can be quite complicated and you need to ensure that your broker understands the requirements of professional indemnity for fair trading and one of the things is to clearly identify that the business is covered for employee fraud so if they misappropriate funds from your trust account you need to clearly have that set out in the policy. I've seen over the years a number of policies which attempt to avoid paying out employee misappropriations and it obviously leads the business in dire straits and one of the other things that businesses need to keep in mind is that from time to time different policies will become available on the market place and of course you look at what's competitive. One of the traps is that you leave your current insurance policy and you move over to a new insurance policy and then a claim is made under the old policy if you are not careful the new policy holder will say no and you may find that the previous policy provider will say no to covering you as well so you need to clear that up again with your broker to make sure that you have full and extensive coverage right through the term of your business life.
Brian: I think that's very wise words thank you Greg and thank you for sharing that with us.
Greg: Thanks Brian.