What Is Professional
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What is Professional Indemnity Insurance?
Professional Indemnity insurance is designed for professionals who provide advice or a service to their clients. If someone alleges that you’ve made a mistake, overlooked a critical piece of information, misstated a fact or they have misinterpreted you in the course of your work resulting in a financial loss for your client, they may take legal action against you to recover those losses. Whether or not the allegation is true, Professional Indemnity insurance seeks to protect both your assets and your reputation, as well as the contents of your back pocket meaning you can continue running your business without the stress of financial or reputational ruin should a claim arise.
The risk of a claim being made against you isn’t always determined on your skill or level of professionalism. There is always the risk of an unhappy client making a claim against you, and whilst you can’t control this, we’re here to make sure you have some control in what happens next.
Did you know?
Some occupations are required by law or their professional association to buy and maintain Professional Indemnity insurance in order to work in New Zealand.
A Professional Indemnity claim could arise from:
- Failing to provide promised services
- Being negligent in rendering professional services
- Providing shoddy, incomplete, or incorrect work
- Making mistakes or oversights
- Any omissions in the provisions of your service
Regardless of the merit of such claims, your Professional Indemnity insurance will pay for your legal and defence costs, as well as compensation payable to the party making the claim, up to stated policy limits.
Going to court to defend a claim might be in your ‘too hard basket’ but consider not going would be an admission of guilt and have worse repercussions on your reputation!
If you have to make your debut in front of the judge, make sure it’s not costing you an arm and a leg!
What does Professional Indemnity insurance cover?*
There’s a lot that could go wrong when you’re in the business of providing advice or professional services to clients. Thankfully, Professional Indemnity insurance can help protect your bank account and reputation against a variety of common claims, including:
- Providing negligent or misleading advice
- Breach of duty (confidentiality and other privacy issues)
- Defamation, slander or libel
- Intellectual property and copyright infringement
- Bodily injury or illness caused from the professional services covered under the policy
Professional Indemnity policies typically covers the costs of:
- Legal defence related to an approved claim
- Investigating a claim including those by a professional body
- Responding to a disciplinary inquiry
- Court attendance
- Public relations
What is not covered by Professional Indemnity insurance?*
While Professional Indemnity insurance can provide small businesses with many important protections, it typically does not cover:
- Damages that are intentional or deliberate
- Claims or circumstances that are known prior to the period of insurance
- Fraud and dishonesty
- Accidental injury and property damage
*Your policy wording will provide complete details of what is and is not covered by your policy.
Do I really need Professional Indemnity Insurance?
If you are being paid to provide your professional advice or service you have a duty of care to your clients, and therefore need to ensure you are adequately protected!
Professional Indemnity cover is necessary for:
- Anyone who provides paid professional advice or services to any business or individual
- Contractors who work for the government or other organisations whereby insurance is mandatory as a condition of the contract
Examples of some professions that require PI cover are:
- Health Practitioners – Including Allied Health professionals and personal trainers
- Information Technology (IT) contractors – IT professionals may seek Technology Liability , which combines PI with Public Liability cover.
- Management Consultants
- Accountants & Tax Agents
- Real Estate Agents
- And many more!
Even if your occupation is not listed above, a Professional Indemnity policy might still be worth considering. If you’re in the business of providing clients with expert advice or professional services, then Professional Indemnity insurance could give important peace of mind to both you and your clients.
Could this happen to your business?
No matter how good you are at your job, we’re all human and we all make mistakes. Professional Indemnity Insurance allows you to cover yourself if, and when, you do slip up in your normal course of work.
Here is a real-life claim example:
A quantity surveyor attended an onsite meeting and misunderstood the verbal description and specifications of the building project. When looking at the drawings, he had a pre-conceived notion of what was to be plastered and what was not. When the time came to pay, the estimate was out by many thousands of dollars. The Project Manager looked to the quantity surveyor who had made the error and asked him to pay for the variation of cost. The surveyor’s insurer recognised his liability and made a quick settlement offer. Interestingly, the settlement was way more than the fees actually earned for the job. Remember, a $1,000 fee contract can potentially generate millions in liability if something goes wrong.
Get more information
Want to know more about Professional Indemnity insurance? These articles from our blog may help you better understand this type of cover:
What does Professional Indemnity Insurance cover? – A more in-depth look at what a PI policy typically does (and does not) cover.
How the cost of Professional Indemnity insurance is calculated – There are many factors that can help determine how much you will pay for PI cover. Take a look at some of the most common in this article.
The difference between public liability and professional indemnity insurance – Public Liability and PI insurance are both common forms of cover that small businesses often consider. Learn more about what each covers and how they could help protect you and your clients.
Professional Indemnity Claims: when should I notify my insurer? – When you might need to contact your insurer, an explanation of your duty of disclosure, and tips for helping your PI claim go as smoothly as possible.
Does Professional Indemnity insurance cover me against false claims?Yes, your Professional Indemnity policy will provide cover if a claim made against you is false or lacks merit.
Even baseless allegations can be expensive to deal with. Hiring an attorney to defend you and court costs can quickly add up, regardless of whether a claim is true or not. PI insurance helps cover these expenses, as well as any public relations costs needed to help restore your professional reputation.
How much does Professional Indemnity insurance cost?
The amount you pay for Professional Indemnity insurance will depend on several factors, including the industry that you work in and how large your business is. These and other factors that make your small business unique are used to determine the risks you may face on the job. Often, comparing quotes from two or more insurers can help you gain a better understanding of what you can expect to pay for a policy.
To learn more about PI premiums and how policy premiums are calculated, you may want to visit our How much does Professional Indemnity Insurance cost? page.
Where can I buy Professional Indemnity insurance in New Zealand?
BizCover makes it simple and quick for busy professionals to find, compare and buy Professional Indemnity insurance in New Zealand.
In just minutes you can compare multiple quotes from selected leading NZ insurers and buy online. There are no long, complicated forms to fill out and no waiting for someone to call you back. Just a few clicks and you could be covered instantly any time of the day or night!
Click here to start your Professional Indemnity quote.
* As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice.
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