Book an appointment here

Professional Indemnity

Get the right advice from insurance professionals

Or speak to a broker 0800 374 691


Does professional indemnity cover a breach of contract?

Breach of contract

Professional indemnity insurance generally does provide coverage for legal costs and claims related to breach of contract. However, the extent and conditions of coverage vary based on the specific policy and its terms.

Does it?

To begin, it’s essential to clarify if professional indemnity insurance can cover breach of contract.

Coverage Inclusions

Professional indemnity insurance does provide coverage for breach of contract, but it typically pertains to the negligence aspect of the contract.

Specificity Matters

Not all breaches of contract are covered; it generally covers unintentional breaches rather than deliberate actions or omissions.

Policy Variation

Different insurance providers may have varying inclusions and exclusions. It's always best to check your policy details or speak with an insurance broker.

Does professional indemnity insurance cover breach of contract Gerrards

Why does professional indemnity cover breach of contract?

Now that we understand that it does offer some coverage, let’s delve into the reasons behind it.

  • Protection from Financial Loss: The primary purpose of professional indemnity insurance is to protect professionals from financial loss due to mistakes, negligence, or unintentional omissions.

  • Building Trust: Having this coverage can foster trust with clients, knowing that if something goes wrong, there’s a system in place to rectify the situation.

  • Legal Obligation: In some professions or industries in New Zealand, having professional indemnity insurance might be a regulatory or contractual requirement.

What does it cover in relation to breach of contract?

So, what specifically does it cover in relation to breach of contract?

  1. Negligence: If a professional fails to deliver their service as expected, leading to financial loss for the client, this is often covered.

  2. Omission: Leaving out critical information or steps that results in a breach can be covered.

  3. Errors: Genuine mistakes made during the service delivery that leads to breach of contract can be included.

Does professional indemnity insurance cover breach of contract Claim

What are the advantages and disadvantages?

Like all insurance types, professional indemnity comes with its set of pros and cons.

  • Financial Safety Net: Covers potential financial losses, ensuring business stability.
  • Enhanced Professional Image: Demonstrates to clients that the business is responsible and prepared for unforeseen issues.
  • Legal Defense: Can cover the cost of defending against lawsuits, even if the lawsuit is groundless.
  • Premium Costs: Regular premium payments can be a significant expense for businesses.
  • Doesn’t Cover All Breaches: Intentional breaches and some specific exclusions might not be covered.
  • Possible Increases in Future Premiums: After a claim, future premium costs may increase.

Common Misunderstandings

  • All Breaches are Covered: As mentioned, intentional breaches are typically not covered.
  • One Size Fits All: Each business’s needs are unique; a policy might need to be tailored.
  • Once Covered, Always Covered: Some policies might not retroactively cover actions before the policy began.

How can Gerrards help?

At Gerrards, we specialize in business insurance in New Zealand.

  1. Expertise: We can provide expert advice on the best coverage for your business needs.
  2. Tailored Solutions: Recognizing the uniqueness of each business, we offer tailored insurance solutions.
  3. Claim Assistance: If you ever need to make a claim, our team is here to guide you through the process, ensuring it’s smooth and hassle-free.

What our clients are saying