Lawyer Insurance NZ: Professional Indemnity for Law Firms

What the Law Society asks of lawyers

• Telling clients whether you hold PI under rules 3.4 and 3.4A
• Saying whether it meets the minimum standard: the greater of $1.2m per practice or $900,000 per principal
• Full detail if it does not: insurer, limit, per-claim basis and excess

Negligent advice

Wrong advice on a contract, a trust deed or a property transaction.

A missed deadline

A limitation period, appeal date or settlement offer lapses.

Payment fraud

Social engineering around fund transfers targets law firms.

Work after you stop

Claims-made cover ends with the policy, so past work is exposed without run-off.

Work out what to raise

Tick what applies to you

• I practise on my own

  Covers to raise: Professional indemnity, Public liability

• I am a partner, shareholder or director of a firm

  Covers to raise: Professional indemnity, Public liability, Statutory liability

• I am a barrister sole

  Covers to raise: Professional indemnity, Public liability

• I hold trust account money

  Payment fraud often sits outside PI, so ask about it.

  Covers to raise: Professional indemnity, Cyber

• I do property, trust or contract work

  Covers to raise: Professional indemnity

• I manage limitation periods and court deadlines

  Covers to raise: Professional indemnity

• Clients visit my office

  Covers to raise: Public liability

• I plan to retire, sell, merge or move to the bar

  A claims-made policy only responds to claims made while it is in force, so run-off is worth raising.

  Covers to raise: Professional indemnity

What these covers do not pay

• Fines, penalties and some disciplinary outcomes are usually not paid.
• Dishonest or fraudulent acts by you are generally excluded.
• Money lost to a payment fraud may need a separate cover, not PI.
• Claims made after the policy ends may be uninsured unless run-off is in place.
• Your own fees and the cost of putting right your own work are typically outside cover.

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.

• Data and privacy duties

  The contract asks you to protect client information, keep it secure and report a breach. It often refers to the Privacy Act 2020, which has its own duties on notifying serious breaches.

  Covers to raise: Cyber, Professional indemnity

  What it does not decide: It does not decide whether a breach is insured. Cyber policies differ on response costs, privacy claims and fines, and some penalties cannot be insured at all.

General information, not legal advice. The full clause and the policy wording decide how it applies.

Check your certificate of currency against the contract

Clients and main contractors in this trade ask for:

• Your PI position, set out in client care information
• A limit set in a corporate client's terms
• Run-off cover when a practice closes or merges

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

  Defence and settlement of a claim that your advice or work cost a client money.

  Common trigger

  A missed deadline, an error in a document or negligent advice.

  Usually not covered

  Dishonest acts, fines, and claims made after the policy ends without run-off.

• Cyber

  May respond to

  Response costs and some losses from a breach or payment fraud, depending on the wording.

  Common trigger

  Social engineering or a compromised mailbox.

  Usually not covered

  Upgrading systems afterwards.

• Public liability

  May respond to

  Injury or property damage involving a client or visitor at your office.

  Common trigger

  A client trips on a step or damage at a conference room.

  Usually not covered

  Financial loss from advice.

• Statutory liability

  May respond to

  Defence costs if a regulator investigates or prosecutes, depending on the wording.

  Common trigger

  An investigation under a workplace or other statute.

  Usually not covered

  Health and safety fines, which can never be insured.

If something goes wrong

• Wrong advice on a transaction

  A client says advice on a property contract left them out of pocket.

  May respond: Professional indemnity

  Have ready

  • The file and engagement letter
  • File notes and emails
  • Your current limit and excess

• A deadline lapses

  A limitation period or appeal date passes before the claim is filed.

  May respond: Professional indemnity

  Have ready

  • The diary or case management record
  • Correspondence with the client
  • Date you became aware

• A fake payment instruction

  A spoofed email changes the bank details on a settlement and funds go to a fraudster.

  May respond: Cyber, Professional indemnity

  Have ready

  • The email chain and headers
  • Bank records of the transfer
  • Time you reported it to the bank

• Retiring with past work behind you

  A lawyer retires, the policy ends, and a claim about old work arrives a year later.

  May respond: Professional indemnity

  Have ready

  • Your policy schedule and dates
  • Details of any run-off arrangement
  • A list of past work areas

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.

Licence versus insurance

A licence is not insurance.

What the licence or register says

• Under the client care rules, lawyers tell clients whether they hold PI and whether it meets the Society's minimum standard.
• The standard is the greater of $1.2m per practice or $900,000 per partner, shareholder or director. Defence costs sit outside it (checked 11 November 2026).
• If it does not, the lawyer says they hold none, or gives the insurer, the limit, whether it applies to each claim, and the excess.
• The Society consulted in 2026 on requiring PI for some lawyers. No outcome was published when we checked on 11 November 2026.

Source: New Zealand Law Society

Related industries

• Insurance for engineers
• Insurance for accountants and bookkeepers
• Insurance for IT contractors

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

Check your PI against the Law Society standard

Tell us your practice area, how many lawyers you have and your current limit and excess on the form. 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.