Professional indemnity (PI) insurance remains an essential form of protection for consultants, advisers, and small businesses in New Zealand.
Marsh has advised that while most professionals recognise its importance, policy wording and structure often create uncertainty about whether cover is adequate.
Brokers urged to review service descriptions and policy wording
A priority area is ensuring that the services listed in a policy are a true reflection of what the business provides.
Marsh noted that an inaccurate description can leave gaps in cover, and suggested that brokers verify the scope of services with clients before policies are finalised.
Claims mitigation features may add protection
Beyond financial support in the event of a claim, some PI policies provide benefits that help reduce the impact of potential incidents.
These can include funding for legal advice, media management, or other early-intervention measures that may prevent disputes from escalating.
Marsh recommended that brokers check whether such features are available and relevant to the client’s profession.
Defence costs and liability limits require attention
The way defence costs are treated can significantly affect overall protection.
Marsh pointed to policies with “costs-in-addition” limits, where defence costs are paid outside the sum insured, preserving the full limit for any settlement.
Policies with “costs-exclusive retention” may also benefit businesses by having insurers cover legal expenses immediately, with the retention only applying if a claim is paid.
Ongoing broker advice and contract obligations
Marsh also underlined the importance of ongoing broker support.
Clients may be asked to prove their PI cover or sign contracts with specific insurance requirements.
Seeking broker input before signing can help identify whether a contract creates obligations that exceed the policy in place.
Run-off and retroactive cover remain important
Professionals winding down their business may require run-off cover to protect against claims arising from past work.
Similarly, retroactive cover – particularly policies with an unlimited retroactive date – can extend protection to earlier services, although this may not be available to those with a poor claims history.
Marsh advised brokers to ensure clients understand how these provisions operate, noting that the terms and scope of cover can vary considerably between policies.
Marsh issues guidance for Kiwi trades on tool security
Marsh has also issued guidance for New Zealand tradespeople and contractors aimed at reducing tool theft and improving insurance outcomes.
The firm advised that theft continues to pose a significant challenge for tradies, with losses affecting both productivity and insurance claims.
Recommended measures include securing tools in reinforced boxes or cabinets, using locks resistant to bolt cutters, and fitting work vehicles with alarm systems.
Adding sensors to detect forced entry or tampering can provide additional deterrence.
Asset tracking and identification encouraged
To assist in recovery and to support claim evidence, Marsh suggests engraving tools with a business name or phone number and maintaining a full inventory of assets, including receipts and photographs.
For higher-value equipment, GPS trackers can provide real-time location data and make stolen goods harder to resell.
Insurance considerations for trades businesses
Marsh noted that personal contents policies do not extend to work tools, and advised trades businesses to consider specialised cover that can be tailored to equipment age, portability, and replacement terms.
Some policies allow for new-for-old replacement or specific limits for mobile equipment.
Brokers are encouraged to help clients understand exclusions, which may include theft from unsecured vehicles, employee theft, material defects, or gradual deterioration.
Marsh recommended that businesses uncertain about their cover consult with a broker who specialises in trades, as policy adjustments can often be made without significant cost.
