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Don’t get caught out, find out why Professional Indemnity Insurance may be right for your business. 

What is Professional Indemnity Insurance?

Professional indemnity insurance (PII) is designed to protect professionals against legal claims and financial losses arising from negligence, errors, omissions, or malpractice in the course of their professional services. 
Professional Indemnity cover helps reduce the impact of potential lawsuits or claims made by clients or third parties who allege that they have suffered financial losses or damages as a result of professional advice, services, or recommendations provided by the insured individual or business. 
While professional indemnity insurance is not legally mandated across all professions in New Zealand, many clients may insist on businesses having Professional Indemnity Insurance as a condition of working together. 
This coverage typically includes legal fees, court costs, compensation payments, and other related expenses incurred in defending against or settling claims. The specific coverage can vary based on factors such as the nature of your profession, the size of the business, and the level of risk involved in the services provided. 

What to Consider When Assessing Your Professional Indemnity Insurance Needs:

  1. Evaluate your professional risks: Identify the potential areas of risk in your professional practice, considering factors such as the complexity of your services, the industry standards, and the potential consequences of errors or negligence. 
  2. Assess your assets and liabilities: Determine the value of your professional assets, including your reputation, client base, and financial resources, as well as potential liabilities that may arise from professional negligence. 
  3. Understand industry standards: Research the typical coverage limits and requirements within your industry or profession to ensure adequate protection. 
  4. Review contractual obligations: Examine any contracts or agreements with clients, partners, or regulatory bodies to understand whether professional indemnity insurance is required or recommended, and if so, what specific coverage limits and conditions apply. 

Example of a Professional Indemnity Insurance claim:


A Gardener advises a client to use a particular pesticide; however, it ends up harming their plants or the environment. The client then files a claim against the gardener for damages.

The Professional Indemnity Insurance the Gardener has will cover legal costs, settlements, or compensation awarded to the client, ensuring the financial stability of the Gardener business amidst such claims. 

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