The following points highlight some key aspects an adviser should consider when looking at purchasing professional indemnity insurance.
- Who are the parties named as covered by the policy?
- Does this include all advisers and entities under which they operate?
- Does this include cover for administration staff?
- What happens if I bring someone into the business? When do they need their own cover?
Operative or Insuring Clause
- Does the insuring clause clearly describe what is insured?
- Does the cover you understand you have bought meet the cover you need?
- Are there any activities which you undertake that would not be seen to be included by the business description?
Territory and Jurisdiction
- Do you offer advice to clients outside of NZ? Does the policy include cover for this advice?
Limit of Indemnity
- What level of cover are you required to carry under your agency agreements?
- Does the limit of indemnity you hold reflect the mix of product advice you give now?
- Do any of the definitions change the meanings of the words or expressions in the insuring clauses or exclusions?
- Do any of the exclusions remove cover for any activities necessary to conduct your core business?
- Do any of the exclusions remove cover for any activities necessary to conduct your non-core business?
Excess and related clauses
- Do you understand how the excess operates in practice?
- Does the insurer pay the costs and expenses incurred in defence of a claim (or does this fall within the excess)?
- Is there are a higher excess or deductible for some activities? E.g. Fire & General advice
- Does your cover extend to other types of insurance, E.g. Public Liability, Statutory Liability?
- Is Internet Liability the same as Cyber Liability Insurance?
We would like thank Clinton Stanger of Curated Risk Limited for supplying us with the content.