How much does Professional Indemnity insurance cost?
On average, small business owners can expect to pay around $85 per month for Professional Indemnity insurance in NZ.
We have analysed data from almost 4,000 businesses across New Zealand who took out a stand-alone Professional Indemnity insurance policy through BizCover NZ over the course of 1 July 2023 to 30 June 2024. The sample includes businesses across many different industries, however all have 20 or fewer employees.
The cost of Professional Indemnity insurance depends on a number of key factors including:
- The type of business you operate – the riskier the industry or business, the higher the premium is likely to be
- Your business size and turnover
- The amount of insurance cover you require
- The individuals being covered – are they qualified for the job they are performing
- Previous claims history
Traditionally, Professional Indemnity, also known as PI insurance, was generally only required for occupations such as doctors, lawyers and accountants, however these days most businesses that provide a professional service or give advice require it to protect against legal costs and claims for damages that may arise from a breach of professional duty.
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What is the average monthly premium for Professional Indemnity insurance?
From our analysis, we have found that over 80% of BizCover NZ customers are paying less than $100 per month for their Professional Indemnity insurance.
Below is the full breakdown:
What Small Businesses Pay for Professional Indemnity Insurance (per month) in NZ:
Data based on New Zealand BizCover customers over the course of 1 July 2023 to 30 June 2024.
What is the average cost of Professional Indemnity insurance by industry?
Occupation type is one of the biggest determining influences on pricing of Professional Indemnity insurance policies. The higher the associated risk of service or advice you provide, or the higher a potential claim could end up costing, the higher the insurance premium will most likely be.
As you can see from the below graph, Architects and Engineers pay a much higher premium than, say, Accountants and Marketers. This is because Architects and Engineers are more likely to have a claim for negligence brought about them, and the potential value of such claims is also much higher than other types of occupations. For example, imagine the losses that might occur if an engineer made an error in the design of a bridge and it subsequently collapsed, or an Accountant failing to lodge their clients taxes correctly. Architects and Engineers are more likely to have a claim for negligence brought about them, and the potential value of such claims is also much higher than other types of occupations.
It is important to note, however, that each insurer has their own preferred occupations. What one insurer may consider a high-risk occupation may not be considered as high risk by the next, which is why it’s important to shop around and compare quotes before purchasing a policy.
Average Monthly Premium of Professional Liability insurance by the top 3 i ndustries in NZ:
| Industry | Approximate Average Monthly Total Premium |
|---|---|
| Architects and Engineers | $160 |
| Accountants | $75 |
| Marketers | $65 |
How much do Consultancy related occupations pay for Professional Indemnity insurance?
Just as there are many different types of consultancy related occupations, the premiums can vary greatly between them too. Again, this is partly due to the scope of work each type of consultant conducts, as well as the level of cover that is required. However, there is no doubt that Professional Indemnity insurance is an essential form of cover for all types of consultants.
Here are the average premium our top 3 Consultancy occupations and what they are paying for their Professional Indemnity
Average Monthly Premium of Top 3 Consultancy Occupations in NZ
| Occupation | Approximate Average Monthly Total Premium |
|---|---|
| Recruitment | $115 |
| Management Consultants | $70 |
| Research and Policy Advisors | $65 |
Does the size of my business affect the premium?
Size really does matter – when looking at the cost of Professional Indemnity insurance at least.
Two factors that determine the size of a business are the number of people the business employs and the amount of turnover it generates. Looking at the graphs below, both do affect the cost of the premium, however the amount of revenue generated has a greater influence.
A high turnover is an indication that you do a greater volume of work, and the more work you do, the greater the chance of something going wrong and a claim being made against you. A larger turnover could also indicate that you take on high value contracts which would mean expensive settlements if things don’t go to plan.Two factors that determine the size of a business are the number of people the business employs and the amount of turnover it generates. Looking at the graphs below, both do affect the cost of the premium, however the amount of revenue generated has a greater influence.
Average Cost of Professional Indemnity Insurance by Number of Staff in NZ:
Data based on New Zealand BizCover customers over the course of 1 July 2023 to 30 June 2024.
| Employee Band | Approximate Average Monthly Total Premium ($) |
|---|---|
| 0 | $65 |
| 1 | $70 |
| 2 | $95 |
| 3 | $130 |
| 4 | $155 |
| 5 | $255 |
| (6-10) | $280 |
Average Cost of Professional Indemnity Insurance by Revenue in NZ:
Average Cost of Professional Indemnity Insurance by Revenue in NZ
| Revenue Band | Approximate Average Monthly Total Premium ($) |
|---|---|
| <10k | $60 |
| <25k | $50 |
| (25,000 – 50,000) | $60 |
| (50,001 – 100,000) | $60 |
| (100,001 – 200,000) | $75 |
| (200,001 – 250,000) | $90 |
| (250,001 – 500,000) | $125 |
| (>500k) | $260 |
Does the level of cover affect the premium?
The Professional Indemnity policies provided by BizCover offer cover limits between $250K to $10M, although the most popular level of cover taken out by BizCover customers in New Zealand is $1M.
When deciding on how much cover you need there’s a number of things to consider, including:
- Legislative and/or industry association requirements – often set minimum amounts are required for some types of occupations
- The size of the contracts you accept – think of how much you could be liable for if something goes wrong, i.e. are you a structural engineer consulting on multi-million dollar developments, or a graphic designer consulting to small-scale organisations?
- Do you have contracts with customers who require you to have a specific level of cover?
- The worst case scenario from the advice or service you provide – what are the maximum damages a client could claim for if they suffered financial or health losses?
- How many employees you have – generally, the more employees you have, the higher the cover limits you need. Imagine if you were unfortunate enough to end up facing multiple claims at once. Highly unlikely, but it could happen!
What is the average monthly cost of Professional Indemnity insurance by level of cover?
| Coverage Level | Approximate Average Monthly Total Premium |
|---|---|
| 250,000 | $55 |
| 500,000 | $80 |
| 750,000 | $85 |
| 1,000,000 | $75 |
| 2,000,000 | $105 |
| 3,000,000 | $250 |
| 5,000,000 | $145 |
| 10,000,000 | $230 |
Disclaimer The Customer Average Monthly Payment Amount Report is based on BizCover NZ customers over the course of 1 July 2023 to 30 June 2024. and presented as a guide only. It may not reflect pricing for your particular business, as individual underwriting criteria will apply. This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusion contained in the policy wording.
