The policy year for your PI cover runs from 1 December in one year until 1 December the following year. If you have renewed, then you will have received policy documentation and invoices.
Aon have sent reminders to members with outstanding renewals: some just need to log back in and accept the renewal quote.
If you have not already submitted your renewal to Aon, you are now uninsured! If this concerns you, prompt action should be taken: at the very least, contact the Aon NZACS team at nz.nzacs@aon.com NOW! The Guide to Renewing insurance and Important Notices for information about the insurance cover was sent to you on 17-18 November. Insurance is renewed via the Aon portal, not the NZACS website.
Aon has advised that the general PI policy coverage finalised with insurers is the same as the 2021/2022 year. Many smaller firms have taken action in response to Communique articles about the perils of cyber liability and the minimum $250k cover. Whilst there has been a lift in base policy costs in the order of 5% to 8%, most firms have reported increased gross incomes, which has been reflected in their individual policy costs.
If you are in business, you are taking on responsibility and are exposed to risk. You can choose to ignore the risk; you can assess that the level of risk in relation to the work you are doing; you may assess that your risks can be covered by the resources at your disposal; or you can (at a cost) pass that risk onto insurers in whole or part. What you cannot do is assume that the risks magically evaporate, that others will ignore the consequences of your failures, or that events outside your control won’t affect you.
Yes, you can contract out of a risk, but that will not prevent a claim being brought in tort, by either your client or others with whom you had no contract. If it is a residential project, you cannot limit the liability (Consumer Guarantee’s Act). Alas, risks are not necessarily proportional to the value of the work being done, nor its complexity. Even proving “innocence” comes at a cost.
In short, the risks in being self-insured (“going bare”) are that your assets and reputation are at risk.
Pro-bono jobs are done without a fee. Or perhaps at some concessional fee such as meeting basic costs but not time and labour. Do not assume that because you are gifting your skills and resources, those that might make a claim against you will take an equally charitable approach. Your responsibilities are the same, and the other risks remain the same, regardless of whether fees are paid or not.
“PJs” (private jobs) are a time-honoured way that employees widen their experience or carry out work for friends and family. An employee acting in the “normal course of their employment” would generally be protected by the employer’s PI cover: that would exclude PJs. An employee doing work on their own account will be carrying the risk, and it is up to them whether they are insured or not.
But the problem is that in the event of a claim, the employer – even if unaware of the project - is likely to be in the claimant’s cross-hairs. Employers should deal with these matters in their staff terms of engagement. Written consent of the directors should be a precondition for staff to engage in related business interests, and all subsequent arrangements should be in writing: a congenial/collegial chat is not sufficient.
The employer, if allowing staff to carry out PJs, should:
The better course of action may be to encourage the employee to bring the project into the office, along with whatever arrangements might be required in respect of fee-sharing or rewards, including the level of responsibility within the firm for that job. The firm still needs to take care in monitoring actions and communications between employee and client: there is the likelihood some will be “informal” and outside usual office circumstances.