Solicitors Professional Indemnity Insurance NZ

What Solicitors PI Insurance Covers

Solicitors professional indemnity insurance is designed to respond to civil liability claims arising from your legal work. The specific scope depends on the policy wording, which is exactly why the wording matters.

Civil liability from legal services
Claims alleging negligence, errors, or omissions in the advice or services your firm provided. Missed deadlines, incorrect drafting, flawed legal advice, these are the core exposures the policy is built around.

Defence costs
The cost of defending a claim, legal fees, expert reports, and associated expenses, even where the claim is ultimately unsuccessful. Some wordings treat defence costs within the limit of liability; others provide them in addition. The difference is significant.

Run-off cover
Protection for claims that arise after a firm closes, a solicitor retires, or practices merge. Because PI policies respond on a claims-made basis, work done years ago can still generate claims, and without run-off cover in place, there's no policy to respond.

Subsidiary and related entity cover
Some wordings extend cover to subsidiaries and related entities, subject to conditions, including notification requirements and additional premium where applicable.

GST on indemnity payments
Certain specialist wordings address GST liability on indemnity payments directly, so the tax cost doesn't come out of your pocket on top of the claim.

Keep in mind, what's covered, what's excluded, and how limits apply varies between insurers and wordings. Talk to your broker about which policy structure suits your firm's specific practice areas and risk profile.

What Affects Your Solicitors PI Premium

Solicitors PI premiums are assessed individually. Insurers look at a range of factors when pricing a law firm's risk, and understanding these helps firms present their risk in the best light.

Practice areas
High-risk areas like conveyancing, litigation, and commercial transactions typically attract higher premiums than lower-risk work. Firms with a mix of practice areas are assessed on the overall profile.

Annual fee income
Premium is generally calculated as a percentage of fee income. Higher revenue means greater exposure, which means higher premium, though the rate applied can vary significantly between insurers.

Firm size and structure
The number of solicitors, whether the firm operates through subsidiaries, and how the practice is structured all affect how insurers assess and price the risk.

Claims history
Prior claims, or even notified circumstances that haven't become formal claims, will be considered. A clean claims history generally attracts better terms.

Limit of liability required
The sum insured you need affects the premium. Some firms are required by contract to carry minimum limits; others choose higher limits based on the value of transactions they handle.

Policy structure choices
Whether defence costs sit inside or outside the limit of liability, the excess you're prepared to carry, and whether run-off is included all affect the final premium. These are decisions worth making with a broker, not just accepting the default.

Why Solicitors Need Specialist PI Cover, Not Just Any Professional Indemnity Policy

Most professionals need professional indemnity insurance. Solicitors need it more than most, and they need a version that's actually built for legal practice.

Here's something that can catch firms out. Generic PI policies from standard insurers often contain exclusions for the provision of legal advice or legal services. That's not a technicality buried in the fine print. That's the entire business of a law firm, excluded. A solicitor who buys a generic PI policy thinking they're covered could find themselves completely exposed when a claim lands.

Specialist solicitors PI wordings exist precisely because legal practice has its own risk profile. Conveyancing, litigation, estate planning, commercial transactions, family law, each carries distinct liability exposures. The policy needs to reflect that.

What Solicitors PI Insurance Actually Covers

At its core, solicitors professional indemnity insurance responds to civil liability claims arising from your legal work. A client alleges you gave incorrect advice. A transaction falls through because of a drafting error. A missed filing deadline causes a client financial loss. These are the scenarios the policy is designed for.

Key areas typically covered under specialist solicitors PI wordings include:

• Civil liability claims arising from professional legal services
• Defence costs, the legal fees and associated costs of defending a claim, even if it's ultimately groundless
• Run-off cover, protection for claims that arise after a solicitor retires, a firm closes, or practices merge
• GST on indemnity payments, which some wordings address specifically so you're not out of pocket on tax
• Subsidiary entities, where the policy can extend to cover work performed through related entities during the period they're part of the firm

Defence costs deserve particular attention. A claim doesn't have to succeed to cost you money. The cost of instructing lawyers, gathering evidence, and running a defence can be substantial, and that's before any settlement or judgment. A well-structured policy covers those costs, either within or in addition to the limit of indemnity, so you're not funding your own defence out of pocket while the claim plays out.

Run-Off Cover: The Gap Most Firms Don't Think About

Run-off cover is one of the most misunderstood aspects of solicitors PI. Professional indemnity policies are written on a claims-made basis. That means the policy in force when the claim is made responds, not the policy that was in force when the work was done.

So if a solicitor retires, a firm winds up, or two firms merge, there's a window of exposure. Work done years ago can still generate claims. Without run-off cover in place, there's no policy to respond.

This is an area where getting the structure right matters enormously. The length of run-off required, the limits that apply, and whether the run-off is automatically included or needs to be arranged separately all vary between wordings. It's not something to work out after the fact.

Why Generic PI Policies Don't Work for Solicitors

Worth being direct about this. Some professional indemnity policies on the market specifically exclude legal services as a covered activity. These policies are designed for other professions, consultants, accountants, IT professionals, and they're not appropriate for law firms.

Buying the wrong PI policy isn't just a waste of premium. It's a false sense of security. A firm that believes it's covered, makes a claim, and then discovers the exclusion is in a far worse position than one that knew it was uninsured.

Specialist solicitors PI wordings are structured around legal practice. They're placed with insurers who understand the risk, price it appropriately, and have claims teams with experience handling legal professional liability. That matters when something goes wrong.

What Affects Your PI Premium

Solicitors PI premiums aren't one-size-fits-all. Insurers look at a range of factors when assessing a law firm's risk profile. Understanding what drives the premium helps firms make informed decisions, and sometimes restructure how they present their risk to get better terms.

At Gerrards, we work through this with every firm we place. The goal isn't just to find the cheapest number, it's to find the policy that actually fits, at a price that reflects your real risk.

What Gerrards Does Differently for Law Firms

We're not a direct insurer. We don't have a single product to sell you. What we do is compare specialist solicitors PI wordings across up to 20 insurers, identify where the gaps are, and give you a straight assessment of what you're actually buying.

At claim time, that distinction matters. A direct insurer's job is to manage their own exposure. Our job is to advocate for you. Those aren't the same thing.

We also review policies annually. Firms change, practice areas expand, headcount grows, new subsidiaries get added. A PI policy that was right two years ago might not reflect what the firm looks like today. We look for those gaps before they become problems.

Every business is different, your policy needs will depend on your firm's specific circumstances, practice areas, and structure. This is general information only. For advice tailored to your situation, get in touch with our team.