What is Professional Indemnity Insurance?
Professional Indemnity (PI) Insurance isn’t just limited to typical ‘professions’ such as accountants, engineers, lawyers, and architects. Essentially, anybody providing advice or consultancy services for a fee has an exposure that needs to be considered. And in any business, mistakes happen. As a business providing advice or consultancy services, you should have PI Insurance protection.
Professional indemnity insurance is commonly taken out by professionals who provide advice or offer consulting services, such as, law firms, architectural firms, valuers, and engineering firms. PI insurance protects you and your business against the financial strain of defending lawsuits. It also provides financial cover for settlements, fines, or penalties when a court judge rules in favour of the plaintiff.
Why is Professional Indemnity Insurance important?
Even if a business is confident with the level of service they provide, it’s inevitable that mistakes can happen. It is important to have PI insurance to shield the business from the financial strain of litigation and costs to defend circumstances resulting from poor counsel, negligence and inadequate service provided to clients. Without it, the business could l be liable for an astounding amount of legal fees and compensation payments. PI insurance is a reliable safety net when the unexpected happens.
What does Professional Indemnity Insurance cover?
Anyone or any business that provides paid professional advice or consultancy services will benefit from having professional indemnity insurance. Some professions that need PI insurance include:
- Management and business consultants
- IT professionals
- Lawyers
- Architects
- Teachers and tutors
- Fitness professionals
- Designers
Protect your business and talk to one of our authorised representatives and find out the best insurance package your business needs to cover your exposures.
Frequently Asked Questions
Who needs professional indemnity insurance?
Professionals who provide advice or consultancy services to a client can apply for professional indemnity insurance. Any professional can get sued for reasons such as negligence, poor advisory, or inadequate service and needs PI insurance.
What is another name for professional indemnity insurance?
Professional indemnity insurance is also known as professional liability insurance and Errors and Omissions (E&O) insurance. They provide financial protection to professionals and businesses from charges of loss, injury, or damages arising from a breach of professional duty or negligence in the performance of professional services.
What is the minimum professional indemnity insurance?
Professions vary in degrees of risks and complexity as to advice and services provided, so each policy needs to take into consideration several factors. It’s recommended to consult your insurance broker to advise on the right PI insurance cover needed to ensure you are correctly covered.
Is it a legal requirement to have professional indemnity insurance in New Zealand?
It’s not mandatory to have professional indemnity insurance in New Zealand, but not having PI Insurance exposes you and your business to costs to defend yourself in court or pay potential penalties or compensation to a third party.
