Professional Indemnity Insurance. These words may not mean much to your average Joe. While we are all responsible for our actions, words and how these affect others, it’s not as if we are bound by law to ensure we give good advice to those close to us, knowingly or otherwise.
For leading members and aspects of the community, however, the level of scrutiny is much higher.
Why Indemnity Insurance?
Many modern businesses, big or small, provide services and/or advice. In fact, this is the crux of a truly significant portion of businesses throughout New Zealand. And many business behemoths have been felled due to the lack of management of damages that have resulted from the advice or services provided.
The damages that can result to your business if you find yourself at the short end of the stick can be monumental. Legal expenses and other financial claims alone are enough to bankrupt a small business beyond devastation.
And this issue can come from any level of trading, through yourself, employees or affiliated members of the business. You could be a self-employed financial adviser or the CEO of a billion dollar corporation, and yet you can be liable for any advice or services provided at a professional level if they backfire.
The kind of errors that a business can be responsible for are many and varied. Imagine you are a doctor practicing in your private clinic. Imagine the clinic has been severely understaffed and as a result you are working 60+ hours a week in order to ensure the ship continues to sail. Then, you find out that a prescription written by you contains a typo or error that resulted in the consumer’s harm.
This is a simple human mistake that is easily understandable. Errors such as these can be made by anyone in any position, and go by unnoticed until it is too late. However, a doctor is responsible for the patients they treat. No matter the source of the issue, the fact remains that harm has been done to the client, and are often entitled to legal compensation as a result. And if your business is unable to provide adequate compensation, there is nothing to protect you from total collapse.
Except for professional indemnity insurance, that is.
Why Do I Need Professional Indemnity Insurance?
Professional indemnity insurance is incredibly important for businesses of any calibre, particularly those that are smaller and less equipped to handle the fallout of such a situation.
Where a larger business with a healthy cash flow could potentially handle financial damages that result from this kind of grievance claim, a small business could be absolutely devastated. Even if your business is not responsible for the alleged claims, the legal battle to settle the issue could be severe enough to make a significant impact.
We recommend that Kiwi service providers consider an insurance broker experienced with the wide variety of legal protection needed. A broker can help you organise the most effective insurance solutions for you.