LIABILITY Professional Indemnity Insurance
Protecting your professional civil liability Professional Indemnity Insurance protects businesses and professionals against costs of legal action arising from the conduct of their practice or business. Professional indemnity insurance used to be something that only people working in certain professions such as engineering, law, or accountancy concerned themselves with. New Zealanders now have a far greater expectation that any individual or company providing a service or advice should be held accountable for their advice and actions. This expectation exposes a wide cross-section of professionals to serious legal implications. If things go wrong, you can face claims for damages and costly legal expenses. Professional indemnity covers you if you provide any professional service involving specialised knowledge or expertise. This includes: > advice > design > consultancy > opinion > analysis.
Some risks that professionals could face Professionals have a legal obligation to provide a duty of care to their clients. Any loss suffered as a result of a breach of that professional duty can form the basis of a claim for damages. This claim could come from a client under the terms of a contract, allegations of misleading or deceptive conduct under consumer legislation, defamation, or from a third party claiming they have been adversely affected by the professional s advice. Bear in mind also that claims can be made for many years following the advice being provided. Professional Indemnity Insurance Lumley s Professional Indemnity Insurance policy provides the cover required to defend your organisation against allegations of negligence, whether founded or not. This includes legal expenses and damages arising from a breach of professional duty. In addition to this, all our Professional Indemnity policies include the following as standard: > Costs related to legal defence plus a separate limit for damages awarded. > If you use up your limit of indemnity on a claim or series of claims within a policy period, you will automatically receive one reinstatement of your limit ( automatic reinstatement ). > No bodily injury exclusion (this exclusion is common in most professional indemnity policies). Policy coverage Our Professional Indemnity Insurance policy protects professionals against civil legal liability arising from the following: > Negligence on the part of you or your employees. > Breach of the Fair Trading Act (sections 9-14). > Defamation. > Unintentional breach of another party s intellectual property rights. > Your liability as a member of a joint venture. > Dishonesty on the part of employees. > Accidental loss of documents and files. > Your liability for the actions of your consultants. > Breach of fiduciary duty. > Services provided by newly acquired or formed subsidiary companies. > Services provided by companies you owned in the past. > Complaints made against you to a professional body. Policy extensions A number of additional cover items can be provided by policy extensions to ensure you have the cover you need for your professions specific requirements. These extensions may include: > Self-employed sub-contractors. > Worldwide cover including USA and Canada. > Cover for claims made against previously owned businesses. Tailored solutions Each profession brings its own specific indemnity requirements. With a standardised professional indemnity insurance product you may find yourself paying for cover you don t require or, alternatively, find that you are not covered for areas you do need. The way to solve this is with indemnity insurance tailored for you or your business. Lumley has built a strong reputation for working with professionals to develop solutions that are appropriate to their specific needs.
Examples of claims where legal defence and reparation costs were covered by this policy 1. Architect An architect designed special concrete panels for a commercial building. The panel joining system failed and the building owner claimed an additional cost of over $250,000 from the architect for repairing the joints. 2. Mortgage broker A mortgage broker was organising mortgage finance for a client. The broker put forward two options for the client, both of which were with banks from which the broker received a favourable commission. After the deal had been completed, the client discovered that another bank had been offering a much better deal. The client alleged that the broker had failed to act in his best interests and claimed the amount it would cost him to transfer his mortgage to another bank and damages, which was in excess of $10,000. 3. Financial planner A client wanted an investment policy for his retirement. The financial planner explained all the options to him, and arranged the policy once the client had agreed to it. Several months later the client decided to go overseas and wanted to withdraw some of the funds. The planner explained that with this policy the money had to be invested for a minimum period before any withdrawals could be made, without incurring penalties. The client alleged that the planner had failed to explain the restrictions of the policy and claimed the penalties he would have to pay under the policy. 4. Occupational Safety & Health (OSH) consultant A manufacturing company contracted an OSH consultant who confirmed the safety of their operations for their workers. Following the inspection, an operator was severely injured when a safety guard was knocked off a machine. The company was prosecuted and fined $15,000 and ordered to pay reparations of $30,000 to the injured employee. The company sued the consultant for the amount they had been fined, the reparations awarded, as well as their legal bill. 5. Public relations consultant A public relations consultant was preparing a strategy paper for a public company due to announce the takeover of a competitor. The strategy paper contained confidential information about the client s trading situation and future intentions upon the takeover. The strategy paper was leaked to the media by a temp working for the consultancy. The company sued the consultant $500,000 for the embarrassment caused and breaching their confidentiality agreement. 6. Consulting engineer An engineer was calculating the specifications for a cantilevered platform to be used for bungy jumping. Errors in the calculation were discovered only after construction had commenced. The client sued the engineer in excess of $400,000 for all losses including costs for building work carried out, removal of the incomplete structure, materials used plus the services of a replacement engineer.
Contact details Email: lumleyliability@lumley.co.nz Telephone: 64 9 308 1100 Lumley General Insurance (N.Z.) Limited Lumley Centre, 88 Shortland Street PO Box 2426, Auckland Coverage is subject to the terms and conditions of the policies as issued. Whether or not or to that extent a particular loss is covered depends on the facts and circumstances of the loss and the terms, conditions and endorsements of the policy as issued. Claims examples are based on actual cases, composites of actual cases or hypothetical situations. This brochure is descriptive and for information purposes only. It does not take into account your own particular circumstances and is not financial advice provided by an adviser under the Financial Advisers Act 2008. We recommend you seek advice from an adviser to discuss your specific circumstances. lumley.co.nz ORG03158/PI/SCREEN/001