The words you will meet in a PI policy, quote or contract, in plain English, with what each one means for you.
Source: https://piinsurance.com.au/glossary/, fetched from the preview https://pi-react-4ee768.pages.dev/glossary/ on 10 Nov 2026; site dated 3 Nov 2026. Preview wording, not yet broker-reviewed. General information, not advice.
How cover works
Claims made
Also: claims-made
A claims-made policy covers claims made against you while the policy is in force. It does not matter when you did the work, as long as it was after your retroactive date. Most PI policies work this way.
What it means for you
The policy you hold when a complaint arrives is the one that responds. A gap in cover can leave old work with nothing to claim on.
Read more: What does claims-made mean
Claims made and notified
Also: claims-made and notified
A form of claims-made cover where the claim must be made against you and also reported to the insurer in the same policy period. Most Australian PI policies are written this way.
What it means for you
Tell your broker or insurer about a claim as soon as it arrives, and before the policy ends. Holding on to a letter of demand until after renewal can cause problems.
Read more: What does claims-made mean
Continuous cover
Also: continuous cover clause
Keeping PI in place with no gaps. It is also the name of a clause in some policies that can help if you renew with the same insurer and missed telling them about a circumstance by mistake. Not every policy has it, and conditions apply.
What it means for you
Keep your policy running without a break while you work. Do not rely on a continuous cover clause to fix something you did not disclose.
Read more: How does professional indemnity insurance work
Insured and named insured
Also: named insured
The insured is anyone the policy covers. The named insured is the person or business shown on the schedule. Policies often also cover partners, directors and employees for work they do for the business, as the wording sets out.
What it means for you
Check that the schedule names the business that signs your contracts. If a client asks to be named on your PI, ask your broker how to answer, because PI policies rarely allow it.
Read more: My contract says I need PI
Jurisdiction
Also: USA or Canada, USA and Canada, US or Canada
The countries whose courts a claim can be brought in, or whose law can decide it, for the policy to respond. Claims brought in the USA or Canada, or under their law, are often excluded unless the insurer agrees to cover them.
What it means for you
If you have clients, projects or a presence in the USA or Canada, tell your broker before you buy. The insurer may agree to cover it, often on different terms.
Read more: What does PI not cover
Professional indemnity (PI)
Also: professional indemnity insurance
Insurance for claims that your professional advice, design or service caused someone a financial loss. It pays to defend you, and any compensation you are legally liable to pay, up to the policy limit.
What it means for you
If a client says your mistake cost them money, PI is the policy that responds, as long as the claim is covered.
Read more: How does professional indemnity insurance work
Retroactive date
Also: retro date, retroactive dates
The earliest date of work your policy covers. Work done before it is not covered, even if the claim arrives while you are insured. It is shown on your policy schedule, and some policies have no cut-off date at all.
What it means for you
A retroactive date after your first job means claims about that earlier work aren't covered. When you switch insurers, ask them to match your existing date.
Read more: What is a retroactive date and why does it matter
Run-off cover
Also: run-off, run off cover, run-off period
PI for someone who has stopped doing new work, for example after retiring, closing a business or becoming an employee. It covers claims made during the run-off period about work you did before you stopped. It does not cover new work.
What it means for you
Claims can arrive years after you stop. Many contracts, and some professional bodies, ask you to keep run-off for a set number of years.
Read more: Do I need PI after I stop working, retire or close the business
Territorial limits
Also: territorial limit
The part of the world where your work, or the events behind a claim, must take place for the policy to cover it. Many Australian PI policies cover work in Australia, and some cover more countries. The schedule or wording sets out the area.
What it means for you
If you work overseas or for clients outside Australia, tell your broker so the policy area matches your work.
Limits and costs
Aggregate limit
Also: in the aggregate, aggregate
The most the policy pays for all claims together in one policy period. Once it is used up, the policy pays nothing more that period, unless the limit is reinstated.
What it means for you
Many contracts ask for a limit per claim and in the aggregate. Most standard policies meet that, but some panels ask for more in the aggregate. Check the wording.
Read more: How much PI cover you need
Costs inclusive and costs in addition
Also: costs inclusive, costs in addition, costs exclusive
Two ways a policy treats defence costs. Costs inclusive means they count towards your limit, so less is left for compensation. Costs in addition means they are paid on top of the limit, sometimes only up to a set amount.
What it means for you
If your policy is costs inclusive, a long defence can use up money you need to settle a claim. Ask your broker which one you have.
Read more: How does professional indemnity insurance work
Defence costs
Also: defence cost, costs of defence
The cost of investigating and defending a claim, such as lawyers and expert witnesses. PI pays them for a covered claim, even one with no merit. Policies usually require the insurer's consent before costs are spent.
What it means for you
Defence costs can be large even when you did nothing wrong. Check whether your policy pays them within your limit or on top of it.
Read more: How does professional indemnity insurance work
Excess
Also: deductible
The amount you pay towards each claim. Depending on the policy, it can apply to defence costs, to compensation, or to both. It is shown on your schedule.
What it means for you
Keep enough money aside to pay the excess if a claim comes. A higher excess usually lowers the premium only a little.
Read more: How does professional indemnity insurance work
GST
Also: goods and services tax
The goods and services tax, added to PI premiums at 10%. If your business is registered for GST, you can usually claim a credit for the GST in your premium.
What it means for you
Ask your accountant whether you can claim back the GST on your premium.
Limit of indemnity
Also: indemnity limit, limit of liability
The most the insurer will pay under the policy. It is shown on your schedule, usually as an amount per claim and in the aggregate. Depending on the policy, defence costs come out of it or are paid on top.
What it means for you
Your contract or regulator usually sets the minimum. Choose at least that, and think about the largest loss your work could realistically cause.
Read more: How much PI cover you need
Loading
An extra amount an insurer adds to the premium because something about the risk is higher than usual. That might be the type of work, a past claim or overseas clients.
What it means for you
Describe your work accurately. A vague description can be priced as the riskiest version of that work.
Read more: How much PI insurance costs
Per claim
Also: each and every claim, any one claim
A limit that applies to each claim on its own. It is the most the policy pays for any one claim. Related claims, such as several that come from the same mistake, may be treated as one claim under the wording.
What it means for you
If a contract asks for a limit for each and every claim, check that your policy pays at least that much for a single claim.
Read more: How much PI cover you need
Premium
The price you pay the insurer for the policy, usually for 12 months. Government charges such as GST and stamp duty are added, and a broker fee may apply.
What it means for you
Your premium depends on your work, turnover, limit and claims history. A broker gets real quotes from insurers once they have your answers.
Read more: How much PI insurance costs
Reinstatement
Also: reinstate the limit, reinstated
A feature in some policies that restores the limit after it has been used, so there is cover for later claims in the same period. It may apply only once, and often not to claims connected to one already paid. Terms differ between policies.
What it means for you
If you could face more than one large claim in a year, ask your broker whether the policy reinstates the limit, and on what terms.
Read more: How does professional indemnity insurance work
Stamp duty
A state or territory tax on insurance premiums. The rate depends on the state or territory, and it is shown on your invoice.
What it means for you
Stamp duty is set by government, not by the insurer or broker. It is part of the total you pay.
Read more: How much PI insurance costs
Claims
Claim
Also: letter of demand
Usually a written demand for compensation, or legal proceedings, brought against you. The policy wording defines exactly what counts as a claim, and some policies include other kinds of demand too.
What it means for you
A letter of demand from a client or their lawyer is usually a claim. Pass it to your broker or insurer straight away, and do not reply in detail first.
Read more: A client is threatening to sue. What should I do
Fee refunds
Also: fee refund, refund of fees, refunds of professional fees
A demand that you pay back fees the client has already paid you. Many PI policies exclude it, because it is a return of your own income rather than compensation for a loss.
What it means for you
Do not offer a refund to settle a complaint without the insurer's consent. It may not be covered, and it can affect your cover for any larger claim.
Read more: How most PI claims start
Known circumstances
Also: known circumstance, known problem, known problems
Facts you knew, or should reasonably have known, might lead to a claim before a policy started. A new policy usually excludes claims that come from them.
What it means for you
Answer questions about complaints and mistakes fully when you apply or renew. A known problem you never notified may not be covered by the new policy or the old one.
Read more: What does PI not cover
Notification of circumstances
Also: notify circumstances, notifying circumstances, notified as a circumstance, notify it as a circumstance
Telling your insurer in writing about something that might lead to a claim, before any claim is made. It could be a complaint, an unhappy email or a mistake you spot yourself. If you give notice as soon as reasonably practicable and before the policy ends, a later claim from those facts can be covered by that policy.
What it means for you
Notify early. If you wait, the problem can become a known circumstance that your next policy excludes.
Read more: A client is threatening to sue. What should I do
Prior and pending litigation
Also: pending litigation
An exclusion for claims that come from legal proceedings started, or under way, before a date set in the policy. It stops a new policy picking up disputes that already exist.
What it means for you
Tell your broker about any court case, tribunal matter or formal dispute already under way. A new policy is unlikely to cover it.
Unpaid fees and fee recovery
Also: unpaid fee, unpaid fees, fee recovery, unpaid invoice, unpaid invoices
Money a client owes you for your work. PI does not pay it, because a client not paying is a commercial risk, not a claim against you. If the client answers your invoice with a claim that your work was negligent, that claim can be covered.
What it means for you
Talk to your broker before you push hard on an unpaid invoice from an unhappy client. Chasing it is often how a claim starts.
Read more: How most PI claims start
Contracts
Consequential loss
Also: consequential losses, indirect loss
Losses that flow indirectly from a problem, such as lost profits, lost revenue or delay costs. Its meaning varies between contracts and court decisions, so contracts often define it.
What it means for you
Many contracts exclude consequential loss for both sides. If one asks you to accept it without a limit, have it checked before you sign.
Contractual liability
Liability you take on because of what a contract says, beyond what the law would place on you anyway. PI covers your legal liability for things like negligence. It usually excludes the extra you agreed to in a contract.
What it means for you
Before you sign, ask a broker to check clauses that make you responsible for more than your own mistakes.
Read more: What does PI not cover
Design and construct
Also: design and build
A contract where one party, usually the builder, is responsible for both the design and the construction. The builder often engages its own designers, or takes over the owner's designers by novation.
What it means for you
If you design for a builder under one of these contracts, read your terms closely. They can include fitness for purpose or other promises that PI may not cover.
Fitness for purpose
Also: fit for purpose
A promise that your work will achieve a stated result or suit a particular use. The law usually expects professionals to use reasonable care and skill, not to guarantee an outcome.
What it means for you
A fitness for purpose promise goes beyond reasonable care, so PI often does not cover it. Ask your broker before you sign a contract that includes one.
Read more: My contract says I need PI
Indemnity clause
Also: indemnity clauses, uncapped indemnity
A contract clause where you promise to cover the other party's losses or costs in certain situations. Some go further than the law would, for example covering losses you did not cause, or with no cap. PI may not cover the part that goes beyond your legal liability.
What it means for you
Look for words like indemnify, hold harmless and release. These clauses are common and often fixable, sometimes with a short email to the client.
Read more: My contract says I need PI
Liquidated damages
A fixed amount set in a contract that you pay if something happens, most often a daily amount for finishing late. It is owed under the contract, whether or not the other side can show its actual loss.
What it means for you
Liquidated damages you owe only because the contract says so are often not covered by PI. Ask your broker before you agree to them.
Novated design
Also: novation, novated
On some construction projects, a designer starts working for the owner, then the design contract is transferred, or novated, to the builder. The builder becomes the designer's client. Who can claim against the designer, and for what, depends on the contracts and the novation deed.
What it means for you
A novated designer can face claims from more than one party. Tell your broker before a novation happens, and have the deed checked.
Principal
In a contract, the principal is the party that engages you, often the owner of a project or the client at the top of the chain. In construction it is usually the owner or developer who engages the head contractor.
What it means for you
The principal's contract often sets your PI limit, how long you must keep cover and when you must show a certificate of currency.
Read more: My contract says I need PI
Proportionate liability
State and territory laws that, for many claims about financial loss or property damage, limit each party to its own share of the blame. They do not apply to personal injury claims, and the rules differ between states.
What it means for you
Some contracts try to remove proportionate liability, and some states allow that. If you agree, you could be liable for other people's share, which PI may not cover.
Subcontractor
Also: subcontractors, sub-contractor, sub-contractors
A business or person you engage to do part of the work you have agreed to deliver. Depending on the wording, your PI may cover your liability for their work. It does not usually cover the subcontractor's own liability.
What it means for you
Tell your insurer if you use subcontractors. Check whether they need their own PI, and ask for their certificate of currency.
Policy wording and documents
Certificate of currency
Also: certificates of currency
A short document from the insurer or broker confirming that your policy is in force. It shows the main details, such as the insured, the period and the limit. It is proof of cover, not the full terms.
What it means for you
Clients and head contractors often ask for one before you start, and again each year. Keep copies, especially for contracts that ask for run-off.
Read more: My contract says I need PI
Condition
Also: policy condition
A rule in the policy that you must follow, such as telling the insurer about a claim promptly or not admitting liability. If you break one, the insurer may be able to reduce what it pays, depending on the harm the breach caused.
What it means for you
Know the main conditions before a claim arrives: notify quickly, do not admit fault, and do not settle without the insurer's consent.
Read more: A client is threatening to sue. What should I do
Endorsement
Also: endorsements
A change to the standard policy wording that applies to your policy only. It can add cover, remove it or change a term. It is listed on or attached to your schedule.
What it means for you
Endorsements override the standard wording, so read them. An exclusion added by endorsement can matter more than anything in the general wording.
Read more: What does PI not cover
Exclusion
Also: exclusions
A part of the policy that says what is not covered. Common PI exclusions include known circumstances, injury and property damage, fraud, fines and liability you take on by contract. Some exclusions are added just for you by endorsement.
What it means for you
Read the exclusions in the wording and on your schedule. If your work looks close to one, ask your broker in writing before a claim, not after.
Read more: What does PI not cover
Extension
Also: extensions, policy extension
Extra cover added to a policy, either built into the wording or added for an extra premium. In PI, examples can include loss of documents, dishonesty of employees or some cyber events. What is included varies widely between policies.
What it means for you
Do not assume an extension is included. Check your wording and schedule, or ask your broker.
Insuring clause
The part of the policy wording that says what the insurer agrees to cover. For PI it usually covers your legal liability for claims arising from your professional services, made and notified during the policy period. The exclusions and conditions then narrow it.
What it means for you
Check that the professional services on your schedule describe all the work you do. Work outside that description may not be covered.
Policy schedule
Also: schedule of insurance
The page or pages that show the details of your policy. That includes who is insured, the policy period, the professional services covered, the limit, the excess, the retroactive date and any endorsements.
What it means for you
Check your schedule each time you renew. A wrong business name, service description or retroactive date can cause trouble at claim time.
Policy wording
Also: policy wordings
The full legal document that sets out the cover, the exclusions and the conditions. It is the same for everyone who buys that product. Your schedule and any endorsements apply it to you.
What it means for you
The wording decides a claim, not a summary or a website. Read it, or ask your broker to point out the parts that matter for your work.
Product Disclosure Statement (PDS)
Also: PDS, Product Disclosure Statement, Product Disclosure Statements
A document an insurer must give for some insurance sold to retail clients. It sets out the cover, the costs and the key terms. Many business PI policies are not retail products, so they may come with a policy wording and no PDS.
What it means for you
If your policy has a PDS, read it with the wording before you decide. If it does not, the policy wording is the document to read.
Target Market Determination (TMD)
Also: TMD, Target Market Determination, Target Market Determinations
A document that says who an insurance product is designed for. Insurers must make one for products that need a PDS, so many business PI policies do not have one.
What it means for you
Where a TMD applies, it helps you see whether the product is meant for someone like you. Your broker can point you to it.
Buying and underwriting
Appetite
Also: underwriting appetite, risk appetite
The kinds of work, business size and risks an insurer is willing to cover. It differs between insurers and changes over time.
What it means for you
One insurer saying no does not mean every insurer will. A broker knows which insurers are looking for work like yours.
Broker
Also: insurance broker
An insurance broker arranges insurance for you. A broker usually acts for you, not the insurer, and can compare policies from different insurers. Brokers must hold a licence or be authorised by someone who does.
What it means for you
A broker can explain what a policy covers, help you meet a contract clause and help you through a claim.
Read more: About PI Insurance
Duty of disclosure
Also: duty to disclose
Before you take out, renew, extend or change a business policy such as PI, the law requires you to tell the insurer anything you know, or a reasonable person in your position would know, is relevant to its decision. That includes complaints, mistakes and past claims.
What it means for you
If you do not disclose something relevant, the insurer may be able to reduce or refuse a claim, or in serious cases cancel the policy. If in doubt, tell them.
Referral
Also: referred to an underwriter
In underwriting, a referral is when an application needs a person to review it rather than being accepted on standard terms. It happens when something is outside the usual, such as higher-risk work or a past claim.
What it means for you
A referral is normal and is not a decline. It usually means the insurer wants more detail before it offers terms.
Renewal
Starting a new policy period, usually for another 12 months, when the current one ends. The insurer asks its questions again and can change the premium or terms.
What it means for you
Renew before the policy ends so there is no gap. Answer the renewal questions fully, including anything that might become a claim.
Read more: How does professional indemnity insurance work
Underwriter
Also: underwriters
The person at an insurer, or at an agency acting for one, who assesses a risk. They decide whether to offer cover and on what terms.
What it means for you
The underwriter reads your answers. Clear, complete answers usually mean fewer questions and a quicker offer.
Wholesale and retail clients
Also: wholesale client, wholesale clients, retail client, retail clients
Terms from financial services law that decide how much protection you get when you buy insurance. For general insurance it depends on who you are and the type of policy. Most business PI is treated as wholesale, but some types, such as medical indemnity, can be retail.
What it means for you
Retail clients get extra protections, such as a PDS. Your broker can tell you which applies to your policy.
Advice, licences and complaints
Australian Financial Complaints Authority (AFCA)
Also: AFCA, Australian Financial Complaints Authority
An independent body that resolves complaints about financial firms, including insurers and brokers. It is free for the person complaining. There are limits on which complaints and what amounts it can consider, including for small businesses.
What it means for you
If the firm does not resolve your complaint, or does not answer in time, you can go to AFCA. Time limits apply, so act promptly.
Read more: Complaints
Australian Financial Services Licence (AFSL)
Also: AFSL, Australian Financial Services Licence
The licence ASIC issues to businesses that provide financial services, including advising on or arranging insurance. Insurers and brokers either hold one or act as an authorised representative of a business that does.
What it means for you
Check that anyone who arranges your insurance holds an AFSL or is authorised under one. The number should be on their website and in their Financial Services Guide.
Read more: About PI Insurance
Authorised representative
Also: authorised representatives, corporate authorised representative
A person or business allowed to provide financial services on behalf of a licence holder, who is responsible for them. Simple Insurance is a corporate authorised representative of Metrix Connect, which holds the licence.
What it means for you
You can look up an authorised representative and its licence holder on ASIC's registers before you deal with them.
Read more: About PI Insurance
General advice
Also: personal advice
Advice that does not take into account your objectives, financial situation or needs. Personal advice does consider them. Everything on this site is general information only.
What it means for you
Think about whether a policy suits you and read the policy wording before you decide. For advice about your own situation, talk to a broker.
Internal dispute resolution (IDR)
Also: IDR, internal dispute resolution
The complaints process a financial firm must run itself. You complain to the firm first, and it must respond within set time limits.
What it means for you
If you are unhappy with your broker or insurer, complain to them first, in writing if you can. If that does not resolve it, you can go to AFCA.
Read more: Complaints
Other types of cover
Cyber insurance
Also: cyber, cyber cover, cyber extension, cyber event, cyber events
Insurance for losses from hacks, data breaches and other cyber events. It can cover your own costs, such as restoring systems, and claims from others. PI often excludes cyber events unless the policy includes a cyber extension.
What it means for you
If you hold client data or rely on IT systems, ask your broker whether you need cyber cover as well as PI.
Read more: What does PI not cover
Products liability
Also: product liability
Insurance for injury or property damage caused by products you sell, supply, make or install. It is often sold together with public liability.
What it means for you
If you supply physical products, check whether your public liability policy includes products liability. PI usually does not cover it.
Public liability
Also: public liability insurance
Insurance for injury to other people, or damage to their property, caused by your business activities. It usually covers events that happen during the policy, unlike claims-made PI.
What it means for you
If you visit clients, work on site or have visitors, you may need public liability as well as PI. Many contracts ask for both.
Read more: PI and public liability compared