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Professional Indemnity Insurance

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How much does professional indemnity cost?

The cost of professional indemnity insurance in New Zealand typically averages between $50 – $100 per month. This cost can vary widely depending on the type of business, its size, the level of risk, and the amount of coverage desired.

What is the average cost of professional indemnity insurance? 

In New Zealand, you can generally expect to pay between $50 to $100 per month for professional indemnity insurance, which equates to approximately $800 per year.

While this is a broad average, it’s important to remember that specific industries where claims of negligence can easily arise such as financial services, building inspectors or engineers will have much higher premiums.

Understanding professional indemnity insurance cost factors

What influences the cost of professional indemnity insurance? Several variables can impact the premium you’re quoted, lets look at the crucial factors.

How does business size impact professional indemnity cost?

The larger your business, the higher the risk, and therefore, the greater the potential for insurance claims. This is because a larger business typically means more clients, which in turn increases the probability of a claim arising from professional advice or services. Furthermore, larger companies may deal with more complex and high-value projects, escalating the risk involved and the potential cost of any claim.

What is the effect of industry or profession on indemnity insurance cost?

The cost of your indemnity insurance is also dependent on your industry and profession. Some industries are considered riskier than others due to the nature of their work. For instance, architects, engineers, and finance professionals often have a higher risk of legal action resulting from their professional services or advice, leading to higher insurance costs.

How does your claims history impact your commercial indemnity insurance cost?

Insurers will look at the history of claims within your business. If your business has a clean history with no or few claims, your premiums are likely to be lower. However, a history marked by numerous claims might lead insurers to see your business as high-risk, thus increasing your premiums.

Professional indemnity insurance provides cost effective protection for your business

Professional indemnity insurance is not just a cost; it’s a strategic investment that offers vital protection for your business. Here’s why:

Covers Legal Costs

In the event of a lawsuit, the costs can quickly escalate. Legal fees, court expenses, and potential compensation costs can wreak havoc on a business’s finances. Professional indemnity insurance steps in to cover these costs, protecting your cash flow and financial stability.

Safeguards Reputation

A lawsuit can cause significant reputational damage. By providing the resources to defend against claims, professional indemnity insurance helps to protect your business’s reputation, thereby safeguarding your client base and market position.

Provides Peace of Mind

With professional indemnity insurance, you have the assurance that you’re protected against claims resulting from professional services or advice. This peace of mind allows you to focus on what really matters: running and growing your business.

It’s crucial to have indemnity coverage if you

  • You offer professional advice or services
  • Your industry has high legal risks
  • You have contracts requiring it
  • You handle sensitive client data

How can you save money on professional indemnity insurance?

Even though professional indemnity insurance is an essential part of running a business, it’s still possible to save money on it. Here are four effective ways to reduce the cost:

Use a Broker

Brokers like Gerrards have access to many insurance providers and markets that businesses do not have access to. This wide network allows us to compare many different offers and choose the one that gives you the best coverage for the least amount of money. Think of us as your secret weapon for getting the best insurance deals.

Risk Management

Another way to save money on professional indemnity insurance is through risk management. This means finding out what could go wrong in your business (the risks) and then coming up with ways to stop these things from happening. This could be something like training your staff better, or setting up stronger rules for how things are done in your business. If you can show your insurance company that you’ve got a good handle on risk management, they might lower your insurance cost.

Higher Excess

Excess is the money you agree to pay when you make a claim before the insurance starts to cover the rest. Agreeing to a higher excess can lower your insurance premium. It’s a bit like a seesaw; as the amount you’re willing to pay goes up, the amount you have to pay for insurance goes down. But be careful, you should only agree to an excess that you’d be comfortable paying if something were to go wrong.

Liability Package

Some insurers offer packages that combine different types of cover. For example, a tech liability package might include both professional indemnity insurance and public liability insurance. These packages can be cheaper than getting each type of insurance separately. Just make sure that the package covers everything you need – you don’t want to find out after an incident that you’re not covered.

Top professions that need professional indemnity

In New Zealand, Professional indemnity insurance can provide comprehensive and cost effective protection for many professions.

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