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Checklist: what you should consider when buying professional indemnity insurance:

The following points highlight some key aspects an adviser should consider when looking at purchasing professional indemnity insurance.

The Insured

  • 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?

Definitions

  • Do any of the definitions change the meanings of the words or expressions in the insuring clauses or exclusions?

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

Other insurances

  • 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.

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