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Consumer Information
| DISCLAIMER: The information provided below does not constitute legal advice. If you are unsure whether you have a claim against a scheme member, please seek legal advice. |
What is the Cover of Excellence®?
What is limited liability?
Why should a service provider be able to limit their liability?
To what extent is the service provider's liability limited?
How do I know if a service provider has a Cover of Excellence® scheme?
How do I find a service provider who has a Cover of Excellence® scheme?
What are my rights if I engage a service provider who has a Cover of Excellence® scheme?
What if I have a complaint about a service provider who has a Cover of Excellence® scheme?
What is the Cover of Excellence®?
The Cover of Excellence® is a trademark owned by the Professional Standards Councils. It is used as a brand name for schemes approved by the Councils under professional standards legislation. Occupational associations apply for a scheme on behalf of their members and only members covered by the scheme are eligible to display the Cover of Excellence® logo. Only schemes which satisfy legislative requirements to improve professional standards and protect consumers are approved, giving scheme members limited civil liability.
What is limited liability?
"Liability" is the term used for a legal obligation one person might owe to another person because the first person acted, or failed to act, in a way that caused the second person loss.
Most individual service providers and businesses purchase professional indemnity insurance (PII) to cover their liability. The cost of PII is affected by the level of risk associated with the work, the history of claims in that area of work and against that specific service provider, as well as national and international developments in the insurance market.
Liability can be limited by parliament - as is the case with professional standards legislation - so that if one person sues another person in court for money, there is a cap on how much the court will award in damages against the person who was liable. Why should a service provider be able to limit their liability?
You may have noticed that your car or home insurance has increased dramatically over the past few years. Other types of insurance, in particular professional indemnity insurance (PII), have also been affected. Increases of over 300% a year for PII have been reported in some cases.
This means that insurance for some or certain types of work may be unaffordable, or even unavailable, in the Australian insurance market. Service providers are beginning not to offer services anymore, where insurance is unaffordable. This means that you, the consumer, may have less choice among providers of that service, or increased costs to get the service, due to reduced competition and expensive PII.
Other service providers are buying PII from overseas companies who may not meet the Australian standards for insurance. Some service providers even continue to operate without any PI insurance so, if you made a claim against them, there is no way to recover any money for your loss.
By limiting the liability of a service provider, insurers can better predict the amounts they may have to pay in claims. This increased predictability, and assessment of the insurer's risk, means a fairer and more accurate pricing of their PII. The result is that more service providers will be able to afford PII and continue to provide their services. In the event you made a claim against them, they will be better able to meet your claim.
The state and territory governments of Australia have decided to entitle members of professional associations that have Cover of Excellence® schemes to limited liability, where their approved scheme satisfies the Councils under the professional standards legislation. The Councils determine the cap on liability for an occupational group that will provide the best protection for consumers. They do this after checking the claims data, risk profiles, and the type of work done; additionally, the Councils decision is supported by independent actuarial analysis.
The Commonwealth government, in support of professional standards legislation, has also recognised the limitation of liability of schemes, under relevant Commonwealth laws.
To what extent is the service provider's liability limited?
Monetary cap
Each scheme specifies its cap for the limitation of liability on members of the association who are covered by the scheme. This may be a maximum monetary amount and/or a multiplier of (for instance) 10 times the reasonable charge for services. You can read the scheme summary or contact the occupational association directly for details of how their scheme works.
Jurisdiction
Schemes are created under state and territory-based legislation. Therefore, the liability of scheme participant are limited to the services they provide, in the state or territory where they are covered by a scheme.
If the scheme is prescribed under Commonwealth legislation, then the liability of scheme participants will also be limited under the Trade Practices Act, Corporations Act and the Australian Securities and Investment Commission Act.
Area of law
Scheme members only have limited civil liability. There is no limit in liability if your claim arises from:
- the death of a person;
- personal injury of a person;
- a breach or trust, or
- fraud or dishonesty.
How do I know if a service provider is a Cover of Excellence® scheme member?
Scheme participants must be members of an occupational association with a current scheme. Scheme participants may display the Cover of Excellence® logo on their stationery, promotional materials or other documents.
You can ask your service providers if they are covered by a scheme, or contact their occupational association directly.
How do I find a service provider who is a Cover of Excellence® scheme member?
Only members of an occupational association can be covered by a scheme. They must be within a class of that association which is covered by the scheme.
What are my rights if I engage a service provider who is a Cover of Excellence® scheme member?
You should expect a high standard of service from members of associations that have schemes.
Your service provider should:
- clearly disclose on their business documents that their liability is limited, as required by legislation;
- be able to tell you the cap on their liability; and
- be able to direct you to, or pass your concerns on to, the appropriate organisation/person to handle any complaints you may have.
What if I have a complaint about a service provider who is a Cover of Excellence® scheme member?
If your service provider is covered by a scheme, the occupational association that administers that scheme must have an effective complaints and discipline system in place. This is one of the compulsory requirements for a scheme to be approved by the Councils.
Each year, associations administering schemes report to the Council on the results of their complaints and discipline system, including the effectiveness of the system as a whole in managing consumer complaints and disciplining members.
The Councils do not process complaints against service providers. Contact the relevant association if you have a complaint.
The Councils have published standards required for an effective complaints and discipline system.
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