Professional indemnity insurance is an important consideration for any contractor, but for contractors working within the mining industry, it becomes an absolute essential.
Mining projects will always involve a certain level of risk and, if that risk is not managed carefully it could have far-reaching negative effects. So much so that some mining companies have now made professional indemnity insurance a requirement for all contractors.
Why Should Every Mining Contractor Have Professional Indemnity Insurance?
Much of the contracting work carried out in the mining industry is done by professionals offering specialised services and advice. As a consultant, you may provide mining companies with valuable information that is used to plan and successfully carry out mining operations of all sizes.
However, working as a professional consultant comes with a certain level of responsibility. If you were to accidentally make a mistake or withhold relevant information, then you are liable to be sued for negligence.
If found to be at fault, you could be ordered to pay substantial compensation claims to all wronged parties. Even if you are not the one at fault you may be required to pay significant legal fees to defend your reputation. This is why professional indemnity insurance is so important.
Without professional indemnity insurance, you would be required to cover all of these costs from your own pocket. This could lead to you losing your business and, potentially, even your home and other personal assets. But a professional indemnity insurance policy would cover all of these costs for you, including any legal fees that you might incur during long and drawn-out court proceedings.
What Exactly Will Professional Indemnity Insurance Cover?
A typical professional indemnity insurance policy will cover any monetary loss that results from the actions, omissions or mistakes of the insured party.
This could include an employee who acts dishonestly without your knowledge, the accidental release of sensitive information, unintentional violations of a third party’s intellectual property or acting without due care while providing a paid service.
This kind of insurance policy will generally provide cover for your business, as well as anyone working in your employ, but be aware that not all insurance policies are the same.
3 Important Things to Consider About Professional Indemnity Insurance
Before taking out a professional indemnity insurance policy it’s useful to consider the following three important points:
- How much cover do you need? This will vary depending on the size of your business, along with several other key factors. To ensure you’re getting sufficient protection it’s a good idea to talk to an insurance expert with plenty of experience in the mining industry.
- What’s the largest project you’re likely to work on? When considering insurance, it’s best to consider worst-case scenarios. So, think about the largest project that you’re likely to be working on and make sure your insurance is substantial enough to cover negligence claims arising from that project.
- Have you considered the impact of inflation? If you are ordered to make compensation for financial loss, then the amount will typically be adjusted to account for inflation. For example, you may have caused a loss valued at only $50,000 but if it occurred 10 years ago then the average rate of inflation would add approximately 23%.