Professional Indemnity Insurance
What is Professional Indemnity insurance?
Professional Indemnity Insurance is an essential form of protection for businesses and professionals who provide services or advice to clients. It offers financial security and legal protection to these entities in case a client alleges that they have suffered losses due to an error, omission, or negligence on the part of the business or professional.
The scope of coverage offered by a Professional Indemnity Insurance policy includes legal costs, such as defense costs, court fees, and settlements or compensation awarded to clients. These costs can be substantial and can pose a significant risk to a business's financial health. By having this insurance, businesses and professionals can have peace of mind knowing that they are protected against such risks.
Professional Indemnity Insurance is not a mandatory form of insurance in New Zealand. However, it is highly recommended for businesses and professionals who provide services or advice to clients, especially in fields such as law, accounting, engineering, architecture, and financial services.
What you should consider Professional Indemnity insurance?
Professional Indemnity (PI) Insurance is essential for businesses or professions that involve providing services or advice. It offers protection against liability for damages and legal costs incurred while defending against claims arising from errors, omissions, or breach of duty in the course of work.
Every industry has unique risks that can be addressed through tailored PI policies. PI insurance is mandatory for many professions, including chiropractors, consultants, engineers, architects, real estate agents, and accountants, among others.
Interesting Facts
Professional indemnity insurance is mandatory for contractors working for organizations, including the government, in New Zealand.
(NZ Brokers, September 26th, 2019)
In New Zealand, lawyers account for 21% of PI insurance policies, accountants 11%, technology 4%, and miscellaneous professions make up 40%.
(Lockton Brokers Report on the PI Market, May 2019)
Design and construction are the industries with the highest density of written PI insurance policies, accounting for 24% of the non-US market.
(Lockton Brokers Report on the PI Market, May 2019)
What are the types of covers available?
Civil Liability
- This indemnifies the Insured for any Civil Liability.
Costs and Expenses
- Cover the Costs and Expenses incurred with the prior written consent in the defense or settlement of any Claim covered by specified section of this Policy.
What can it cover?
Some of the benefits of Professional Indemnity insurance policy may include:
- Cover for a consultant's common law liability.
- Cover for damages and compensation costs against you.
- Cover for Public relations fees.
- Corrected: Loss or damage to the client's documents during the provision of the insured's service.
- \tCover for Legal fees and Defamation.
- Cover for Court fees.
- Cover for the cost of investigation.
- Claims for compensation resulting from violation of statutory duty.
What is usually not covered?
CASE STUDY
An investment firm in Auckland was approached by a client named Sarah for investment advice. The firm provided advice to Sarah, but unfortunately, after implementing the advice, Sarah suffered significant financial losses. She then filed a claim against the investment firm seeking compensation for her losses.
Fortunately, the investment firm had professional indemnity insurance in place. This insurance policy is designed to protect professionals from potential legal action and claims made against them by their clients due to their professional advice, services, or products. In this case, the insurance policy covered the investment firm for the losses suffered by Sarah, and it was able to settle the claim without having to bear the full financial burden on its own.
Having professional indemnity insurance in place is crucial for businesses that provide professional services to clients, as it can protect them from legal and financial damages that can result from claims of negligence, errors, or omissions in their professional duties
Why choose FG Insurance?
- Peace of Mind at Affordable Rates
- Flexible Plans
- 24/7 Roadside Assistance
- Fast and Simple Claim Service - online or by phone
- Modern Policy Wordings
- Competitive Pricing