Consultant Insurance NZ: Professional Indemnity and Public Liability
A consultant sells advice, so the main risk is a client saying your advice or work cost them money. That is a professional indemnity claim. Public liability matters when you visit client sites or meet people in person, and cyber cover matters if you hold client data. We have not found a New Zealand law that requires a general consultant to hold any of these. Client contracts and tenders are usually what ask.
In short
- Professional indemnity (PI) is the core cover for management, business and marketing consultants. Read the PI clause in your contract before you sign, including the limit and how long cover has to continue after the job ends.
- Public liability covers damage or injury you cause to other people, such as a client's equipment damaged on a visit. It does not cover bad advice.
- A licensed adviser can read your client contract with you. Some covers are referred to another licensed firm, and we tell you who first.
Where consultants get asked for insurance
- An insurance clause in the master services agreement or statement of work
- Certificates of currency for a tender or panel application
- Supplier onboarding forms from procurement or IT security
- Cover that continues for years after the contract ends
A wrong figure in a report
A client commits money on a market-entry number you got wrong.
A guarantee in a proposal
A "guaranteed savings" promise can fall outside the policy.
Damage on a client visit
A workshop or site visit where a client's equipment is damaged.
Client files leak
Customer lists and credentials you hold become the client's problem too.
Work out what to raise
Tick what applies to you
- I give written advice, reports or recommendations
Covers to raise: Professional indemnity
- Clients make spending decisions from my numbers
Covers to raise: Professional indemnity
- My proposals promise results or savings
A guarantee can sit outside a policy. Worth checking the wording.
Covers to raise: Professional indemnity
- I use associates or subcontract consultants
Covers to raise: Professional indemnity
- I am applying for a tender or panel
These usually ask for a certificate of currency.
Covers to raise: Professional indemnity, Public liability
- I run workshops or visit client sites
Covers to raise: Public liability
- I hold client files, customer lists or credentials
Covers to raise: Cyber
- I have employees
Covers to raise: Statutory liability
What these covers do not pay
- Fee disputes and refunds of what you charged are usually not covered.
- A promise or guarantee of a result may fall outside professional indemnity.
- Deliberate or dishonest acts are generally excluded.
- Public liability does not respond to financial loss from your advice.
- Claims made after the policy ends, about work done while it ran, unless run-off is arranged.
General information only. Whether a cover responds depends on the policy wording.
Which clause is in your contract?
Professional standard
You agree to work with reasonable skill and care, or to a named industry standard. If the work falls short, that is the test a client may use against you.
Covers to raise: Professional indemnity
What it does not decide: It does not decide whether a claim for falling short is covered. Professional indemnity wordings differ on what is excluded, such as guarantees, fee disputes and known issues.
Limitation of liability
A cap on what you could owe the client if something goes wrong, often tied to your fees or a set figure. It can also exclude certain losses such as lost profit.
Covers to raise: Professional indemnity, Public liability
What it does not decide: It does not decide what your insurance pays. A cap in the contract may sit below or above your policy limit, and some claims, such as personal injury, may fall outside it.
Hold harmless
You agree to cover the other party's losses or claims connected to your work, sometimes including claims caused by their own actions. It is also called an indemnity clause.
Covers to raise: Public liability, Professional indemnity
What it does not decide: It does not decide whether your insurer will pay liability you took on only by contract. Many policies limit or exclude contractually assumed liability, so the wording matters.
General information, not legal advice. The full clause and the policy wording decide how it applies.
Check your certificate of currency against the contract
Check the insured name, limit and dates match the contract. The policy wording, not the certificate, decides what is covered. How a certificate of currency works
What each cover may pay, and what it usually does not
Professional indemnity
- May respond to
- A client says your advice or report cost them money.
- Common trigger
- A mistake, an omission or advice that did not work out.
- Usually not covered
- Your own fee refunds and guarantees of results.
Public liability
- May respond to
- Injury or property damage when you work at client sites or host people.
- Common trigger
- A damaged item or a visitor tripping at a workshop.
- Usually not covered
- Financial loss from your advice.
Cyber
- May respond to
- Response costs when client files or credentials you hold are breached.
- Common trigger
- A hacked email account or a lost laptop.
- Usually not covered
- Upgrading your security afterwards.
If something goes wrong
A wrong number in a report
A client commits money to a market-entry plan built on a figure in your report that turns out to be wrong.
May respond: Professional indemnity
Have ready
- The report and any drafts
- Your engagement letter or statement of work
- Sources and workings behind the figure
- Emails showing what the client was told
The savings did not arrive
A client says your cost review was wrong and the savings you projected never came.
May respond: Professional indemnity
Have ready
- The proposal and contract wording
- Progress reports and sign-offs
- Any change in scope the client agreed
A client file leaks
A customer list you were sent for analysis is exposed when your email account is hacked.
May respond: Cyber
Have ready
- What data was held and for whom
- Timeline of discovery
- The confidentiality terms in the contract
Damage at a workshop
A projector at a client's site is knocked over and broken during your session.
May respond: Public liability
Have ready
- Photos of the damage
- Booking details
- The client's repair quote
Typical examples, not real claims. ACC deals with most injuries, so an injury claim is mostly about property and legal costs. Whether a claim is paid depends on the policy wording and the facts.
Why consultants get asked for insurance
A change-management consultant and a marketing strategist both sell judgement and deliverables, and the claim after a bad outcome looks much the same: "your recommendation cost us money." The ask usually arrives in paperwork:
- A master services agreement or statement of work with an insurance clause naming the cover, the limit and sometimes the period.
- A tender or panel application asking for certificates of currency.
- A supplier onboarding form, often handled by procurement or IT security teams.
No statute requires cover for general business consulting. Some consulting sits inside regulated fields, such as financial advice or engineering, with their own rules, so check the body that governs your work.
Professional indemnity
PI responds when a client alleges loss from your advice, work or an omission. For example:
- A market-entry report relies on a figure you got wrong, and the client commits money on it.
- A campaign you designed uses material that infringes someone's copyright, and the client is sued.
- You miss a deliverable, and the client loses a contract.
The policy generally pays your legal defence costs and any compensation you are found liable for, up to the limit. Ask whether costs sit inside or on top of the limit. Our professional indemnity guide covers the mechanics.
Things to read in the policy:
- Claims-made wording. If you stop buying cover, earlier work may be uncovered unless you arrange run-off. Ask what happens when you retire or close the company.
- Retroactive date. If you switch insurers, a date that excludes earlier work leaves a gap.
- Contractual liability. Many policies exclude liability accepted by contract beyond what the law would impose. A "guaranteed savings" warranty in a proposal is the usual trigger.
- Fee disputes. A client withholding payment is not a PI claim. A counterclaim for loss may be.
- Subcontractors. If you bring in associates, ask how their work is treated.
Claims can land long after an engagement finishes. Most money claims can be brought up to six years after the act or omission, with a longer outer limit where the claimant learns of the loss late (Limitation Act 2010, s 11), and some clients ask for cover to continue for years after the contract ends.
Public liability
Many consultants never need it, and some need it every month. The question is whether you are physically around other people's property or people: running workshops in client offices or hired venues, setting up equipment on site, or meeting clients at your own premises.
PI will not pick up a spilled coffee over a client's server, and public liability will not pick up a bad report. Our public liability guide explains limits and exclusions. Ask whether the policy covers work at a client's premises.
Cyber and client data
If you hold client files, customer lists, credentials or access to client systems, a breach at your end becomes your client's problem too. If you hold personal information for a client, the Privacy Act treats the client as holding it, and you as well if you use or disclose it for your own purposes (s 11). An agency must notify the Commissioner as soon as practicable after becoming aware of a notifiable breach (s 114), and the Commissioner says that ideally means within 72 hours (Office of the Privacy Commissioner). Forensic work, notifying people and legal advice are what cyber insurance is designed to respond to. Some PI policies include limited cyber extensions, so ask what is in yours.
What is usually not covered
- Fines and penalties. Health and safety fines cannot be insured (Health and Safety at Work Act 2015, s 29). Regulatory defence costs may fall under statutory liability insurance.
- Dishonest or deliberate acts.
- Your own equipment. Laptops need property cover, for example tool and equipment insurance.
- Lost income if you are ill or injured. That is personal cover. See self-employed insurance.
- Guarantees of results.
- Your own vehicle. See business vehicle insurance.
Reading a client's insurance clause
- The limit. Per claim or in the aggregate for the year?
- The period. How many years must cover continue after the contract ends?
- Named parties. Some clients ask to be noted on the policy.
- Liability cap. A cap in the contract (say, to the fees paid) can sit comfortably next to your insurance. Take advice from a lawyer on clauses like this.
- Evidence. A certificate of currency usually proves cover is in place, and is only issued once an insurer has accepted the cover. Send the clause to your adviser early.
What moves the price
We do not quote premiums on this page. An adviser can give a figure only after the insurer has assessed your details. It tends to turn on what you advise on, turnover and people, the limit and excess, claims history, and whether you handle financial, health or personal data.
How we help
A licensed Smiths adviser phones you to talk through which covers to look at for your kind of consulting. Some business covers are referred to another licensed Financial Advice Provider. We tell you who, and how they are paid, before your details go to that firm. That firm may charge fees. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy. Cover and price depend on insurer underwriting and the policy wording. Financial advice is provided by Craig Smith Business Services Limited, trading as Smiths Insurance & KiwiSaver, a licensed Financial Advice Provider (FSP712931).
If you run the consultancy with a partner or staff, business protection covers the people behind the business. For the wider picture, start with our business insurance guide, and see contractor insurance if you work on fixed-term engagements.
Frequently Asked Questions
Do I need professional indemnity insurance as a consultant in NZ?
We have not found a law that requires it for general business consultants. Clients and tenders often ask for it, and it protects you if a client claims your advice cost them money.
Is public liability or professional indemnity more important for a consultant?
For most consultants, PI. Public liability becomes important if you work at client premises, handle equipment or host people.
I am an IT consultant. Is there a page for me?
Yes: IT contractor insurance covers PI, cyber and the contract clauses developers and IT consultants are asked about.
Can I be sued after I stop consulting?
Yes, within the limitation periods. Ask about run-off cover before you close the business or stop renewing.
Does the cover include my subcontractors or associates?
It depends on the wording. Tell the adviser who works with you.
References
- Privacy Act 2020, s 11 (legislation.govt.nz)
- Limitation Act 2010, s 11 (legislation.govt.nz)
- Health and Safety at Work Act 2015, s 29 (legislation.govt.nz)
- Office of the Privacy Commissioner, notifying a privacy breach
- Insurance Council of New Zealand (ICNZ)
Related industries
Protect the people behind the business
Liability cover protects the business from claims. If you or a business partner could not work, or died, key person and shareholder cover can help keep the business, and your family, going.
- Key person cover, if the business relies on you
- Shareholder cover, so partners can buy each other out
- Income protection for owners and the self-employed
Read the PI clause before you sign
Paste the insurance clause from your client contract and tell us what kind of consulting you do. A licensed Smiths adviser phones you. If we refer you to another licensed firm, we tell you who first. Smiths Insurance & KiwiSaver may receive a commission or referral payment if you buy.
A licensed Smiths adviser phones you. If we refer you to another licensed firm we tell you who first and how they are paid.
Read the full insurance guides
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