Public Liability

The financial security you need in the face of a conflict claims related to the professional services and advice you provide

public liability insurance

What is Public Liability Insurance?

Professional indemnity insurance, also referred to as PI insurance covers you for costs in case you make a mistake in a client’s piece of work that causes them either reputational or financial loss.

What are the benefits of public liability insurance?

Public liability insurance is one of the most common insurance policies taken out by businesses of all sizes and across all industries. It covers legal liability for personal injury or third party damage caused by an employee or by the business during the course of business activities. In New Zealand, the government-funded ACC No-fault systems mean that no matter what you were doing when you were injured – whether your actions caused the injury, or were illegal or dangerous – you will be covered by ACC, so long as the injury falls within the parameters of ACC’s legislation. With ACC, everyone in New Zealand is covered but they forgo their right to sue the third party to obtain compensatory damages. Fault-based systems in other countries have often proven to be extremely litigious and expensive. Long court battles for damages can quickly exhaust an injured person’s resources and can also be a strain on their health. It also covers related legal fees, costs and expenses. The cover is often combined into a single policy with product liability. There is no cover under the policy for injury or damage to the insured’s own property or employees. Because business environments are so diverse, risk assessment for liability insurance is occupation specific. Each business has its own unique characteristics which often have a bearing on the liabilities that the business may incur. For public liability one key point of investigation when determining liability is the Insured’s degree of physical control over the affected property and any property which was associated with the cause of the loss, including its ownership and/or occupation. Both the property owner and business owner may incur a legal liability for an accident which occurs on the property, where these parties are different. In the case of the business owner who leases the property this liability may arise under the lease agreement. The general public has an ever-increasing awareness of their rights after sustaining an injury or loss caused by another party. Liability exposures are generated by the businesses activities of every organisation and liability may arise from tort, contract or statute law. Public liability claims arise mainly under the law of torts, which is based on civil wrongs arising from negligence. Negligence occurs when there is lack of care resulting in an accident.

Why you need professional indemnity insurance?

Why you need professional indemnity insurance?

Professional indemnity insurance is mandatory in some industries, such as medicine, accounting, law and financial advisers.

But even in cases where it’s not required by law, it’s recommended for anyone who is providing professional services or advice in exchange for a fee – like, graphic designers, IT consultants and more. Regardless of your legal obligation, it’s often a customer requirement that you have this cover in place. Here are some of the client industries we work with.

  • Accountants
  • Architects
  • Construction & engineering firms
  • Design professionals
  • Healthcare workers
  • Insurance brokers
  • Independent financial advisors
  • Management consultants
  • Physicians
  • Solicitors
  • Surveyors

How to buy professional indemnity insurance

Tell us about your business – we’ll help you to build your professional indemnity insurance quote and explore any other insurance needs.

How much do you need?

You’ll need to think about the type of projects you work on, and whether your clients, regulator or professional body ask you to have a minimum level of cover.

You can usually choose between NZ$250.000 and NZ$10 million of professional indemnity insurance.

Your clients may tell you the cover amount they need you to have in place. If they don’t, it’s always worth checking before you take on the work.

Need advice? Talk to one of our advisors for a quote over the phone – schedule a call now.

Professional Indemnity Insurance FAQ's

Professional indemnity insurance isn’t a legal requirement. But regulators and professional bodies may require your business to have professional indemnity insurance, so you should check whether it’s compulsory. As an example, professions like solicitors, accountants and financial advisors are required to have professional indemnity insurance.

You’ll also be able to add any of the following policies to your overall business insurance:

●        Public liability cover: Public liability insurance covers your business for the cost of any compensation claims you might face if someone becomes ill or injured or has their property damaged as a result of the work you do

●        Employers’ liability cover: Employers’ liability insurance covers legal costs resulting from an employee becoming ill or injured, or having their property damaged as a result of your business

●        Product liability cover: Product liability insurance protects you against the cost of legal fees resulting from someone becoming ill or injured, or having their property damaged by a product you sell – which you may be liable for even if you didn’t manufacture it

●        Business interruption cover: Business interruption policies cover you for lost income if the running of your business is interrupted by an insured event such as a fire or flood

●        Business buildings cover: Also known as business property insurance, this covers you for the cost of any damage done to your premises resulting from an insured event

Professional indemnity insurance claims can be wide-ranging, but some examples are given below:

Management consultant – a business plan provided to a client doesn’t deliver the expected results. They claim against you for their financial loss.

IT contractor – a website, application or software provided to your client isn’t fit for purpose. They claim against you for the cost of putting the mistake right.

Engineering contractor – some CAD work you undertake for a client contains the wrong measurements and causes long delays to your client’s project. They claim against you for the cost of putting the mistake right.

Fitness professionals – a client injures themselves during a session. They make a claim against you alleging that you failed to properly explain how to perform the exercise.

Photographers – a client alleges that the photographs taken aren’t suitable for use, or a memory card corrupts and you lose all the day’s shots. They claim against you for the cost of re-organising the shoot.

Teacher/tutor – a client doesn’t achieve the necessary grades to pass their exams. They claim against you for the financial losses suffered.

If you’re arranging professional indemnity insurance to meet the requirements of a client contract or regulated industry body, it’s worth checking with them if they expect a minimum level of cover in order for you to start work.

If your client/industry body does not have minimum requirements, give some thought to a worst-case scenario and the likely costs involved in putting your mistake right.

We offer professional indemnity insurance for over 200 professions and have levels of cover ranging from NZ$250,000 to NZ$50m, so you are guaranteed to find the right cover for your business.

Yes. When you purchase professional indemnity insurance with LifeCovered®, a proof of insurance document is emailed to you instantly detailing the cover you hold with us. Many of our customers arrange cover with us in order to meet the insurance requirements of clients, agencies and other parties. This document will help you show that you have the appropriate cover in place to start work.

Professional indemnity insurance is not premise based so it doesn’t matter where you’re working, if you’re offering advice then you need PI.

How much will professional indemnity insurance cost?

The cost of taking out professional indemnity insurance for your business operations will vary depending on several key factors, which include:


– The nature and scope of the advice your business provides
– The size of your business and turnover rate
– The size of your clients’ businesses
– The amount of coverage your business needs

Business Scope and Professional Indemnity Insurance

Typically, you should expect to pay higher premiums, the riskier your business advice is, or the higher the stakes are for the clients receiving the advice.

For instance, legal, investment, business, or medical advice from professionals such as lawyers, financial planners, or commercial accountants, can have a relatively high financial or health risk to the recipients, thus, their professional indemnity insurance will have higher premiums.

In comparison, the advice provided by professionals such as bookkeepers, interior designers, and graphic designers typically has lower financial and health risks to the recipients, thus, their professional indemnity insurance will likely have low premiums.

Business Size and Turnover

When it comes to the cost of professional indemnity insurance, the size of the business does matter.

For instance, a marketing and advertising company with 12 employees will generally require a larger professional indemnity insurance coverage than a sole trader operating in the same industry or an agency with only a few members of staff.

Likewise, businesses providing expert advice to big companies, schools, or governments will generally receive higher professional indemnity premiums than those of businesses providing advice to individuals and smaller organizations.

However, there are a couple of exceptions to this rule. One example is medical advice. Since the stakes are usually high for the recipients, the costs of professional indemnity will be high.
Another example of situations where advice is provided to an individual but the professional indemnity premiums are high involves financial planners. This is due to the fact that the stakes are usually high when dealing with finances and the insurance companies are aware of this.

Professional Indemnity Level of Cover

In general, professional indemnity insurance for small to medium businesses is available in either $1million, $2million, $5million, $10million, and $20 million.

  • Key factors to consider when determining the level of professional indemnity coverage you need include; the nature of the advice you provide and the business size. These will help you to determine the appropriate amount of cover ($) your business requires.
  • The important thing to note here is that the greater the potential damages or losses from the advice your business provides and/or the bigger your client’s business is, the higher the amount insured.
  • You need to consider things like, what are the biggest risks that could arise from the advice you provide or fail to provide, and what are the maximum damages that your clients can claim for in case they suffered health or financial losses following your advice. Focus on the upper limits.
  • How many employees do you have directly dealing with your clients and providing advice? Are they well-experienced? Is your staff turnover rate high?
  • Do you provide crucial advice to big companies, schools, government departments, councils?
  • Is your business operating in an advice industry that is high-risk for example medical, financial services, aviation?

 

Key factors to consider when trying to figure out the appropriate professional indemnity level to cover:

  • You need to consider things like, what are the biggest risks that could arise from the advice you provide or fail to provide, and what are the maximum damages that your clients can claim for in case they suffered health or financial losses following your advice. Focus on the upper limits.
  • How many employees do you have directly dealing with your clients and providing advice? Are they well-experienced? Is your staff turnover rate high
  • Do you provide crucial advice to big companies, schools, government departments, councils?
  • Is your business operating in an advice industry that is high-risk for example medical, financial services, aviation?
  • Some government departments and councils insist on a minimum coverage limit of $2million.

In case your business operations involve working in the above-mentioned situations, you will require a minimum of $10million or even $20million in public liability cover.

So, how much will professional indemnity insurance cost you?
Regardless of if you are a sole trader consultant or a professional advisory agency, in case you suspect that you are not appropriately covered or are paying excessively high professional indemnity insurance premiums, our professional team at LifeCovered® can be of assistance. You can reach us at 0800259925 or schedule a callback with one of our business advisors for a review of your current cover.

Professional Indemnity Insurance cost consultants and sole traders begin from $700 p.a.

Here are some examples of professional insurance costs:

– P.I cost for sole trader consultants offering low-risk advice: from $350
– P.I cost for an I.T. consultant: from $600
– P.I cost for an environment consultant: from $800

Important Note: Even though cheaper professional indemnity policies can seem more appealing on the surface, it is crucial to ensure that the policy covers you for the activities your business undertakes. This way, the insurance policy, and the business will respond as expected in case a claim ever arises.