All businesses operating in New Zealand, including contractors and consultants should consider Statutory Liability Insurance.

Why you need it

Statutory Liability Insurance protects your business – you and any employees, directors, trustees and managers – against unintentional breaches of New Zealand laws that result in prosecution.

What does it cover me for?

Subject to the policy terms and conditions, Statutory Liability Insurance will cover the legal defence costs and reparations if you unintentionally breach certain New Zealand laws, including the Privacy Act 2020, Health and Safety at Work Act 2015, Consumer Guarantees Act 1993, and Fair Trading Act 1986.

It also covers costs related to workplace injury or Commerce Commission investigations.

Any New Zealand employer should consider Employers Liability Insurance for their business.

Why you need it

Employers Statutory Liability protects business owners and directors from financial impacts if employees make claims against the employer on the basis of pain, suffering or loss of enjoyment of life.

What does it cover me for?

Subject to the policy terms and conditions, Employers Liability Insurance covers the legal defence costs plus damages or settlements associated with workplace personal injury claims not covered by ACC, such as depression, anxiety or mental anguish; trauma, nervous shock or fright; and disease or infection resulting from unsafe workplaces.

We all make mistakes and making errors in your day-to-day work is the main risk bookkeepers face. Anything that could potentially cause a financial loss to your client is a risk. It could be as simple as transposing a number right through to a major miscalculation. Or it might be related to an omission – you forget or omit to do something you should have.

In fact, when it comes to claims against an individual or business providing professional advice, there doesn’t need to be an actual error or omission; someone just needs to allege a mistake has been made and you will need to seek legal advice to defend that allegation or claim against you.

I don’t think people giving professional advice truly understand the risks they face.  I think this is especially true for small businesses or sole traders who can be inclined to think that the size or scale of their operation protects them.  It’s that idea that, “I only do this or that for a few clients, so I don’t really need protection.”  Unfortunately, it doesn’t work like that.

We see that play out all the time. You only have to consider cyber-attacks.  Small businesses with fewer protections and security protocols in place are at significant risk of viruses or being hacked with sensitive client data stolen or ransomed.  It’s a huge reputational risk and the mitigations alone could put a small operator out of business if they don’t have the right protection in place. The basic rule is, if you’re using the internet in any way to transact business, you’re at risk.

And then, of course, there are the risks related to your business premises, property and office equipment. We know New Zealand is prone to natural disasters of all kinds, not to mention fire and theft. If you can’t afford to replace everything you need to carry on your business if the worst happens, then you need insurance cover.

This is an interesting question and depends on which insurance policy we are discussing. For instance, Professional indemnity, although it does cover losses suffered by third parties, primarily it protects the bookkeeper from claims arising out of actual or alleged acts, errors or omissions resulting from their business activities. Note, the two most important words here are alleged and omissions.

The policy does provide cover for third party losses where a claim is proven or if it is deemed more financially viable to pay a settlement than to defence a claim. So, in that sense, it does provide clients with peace of mind that should a mistake be made, they won’t necessarily be left out of pocket.

I should mention that we don’t recommend members advertise the fact or the amount they are insured for as t may give some individuals ideas about make false allegations because you’ve got deep-pocketed insurers that will pay up.

The liability package for the ICNZB members consist of 4 main policies with optional Cyber. But as part of our advice process, we would also help you assess other general risks, so I’ve included these in a summary below.

Professional Indemnity

This policy provides members with cover for actual or alleged, acts, errors or omissions from their professional advice.

Public or General Liability

This policy provides members with cover for claims resulting from accidental injury or damage to third party property. It’s important to note that the injury or damage needs to be the result of a negligent action.

Statutory Liability

This policy provides cover for claims or investigations that have resulted from a breach of a New Zealand statue. So, if someone was to be injured in a member’s office due to poor health and safety, they might face a prosecution or investigation from Worksafe. This could potentially need to be defended or fines or reparations may eventuate. It should be noted that in New Zealand, fines cannot be insured against so if a fine was the result of a workplace injury the member would have to pay it.

Employers Liability

This policy covers claims from employees for injury or illness that aren’t covered by ACC.  We understand that many Bookkeepers are sole traders, but Bookkeepers with staff face the possibility an employee could suffer an injury, such as RSA, that ACC won’t cover, and the employee might seek to recover treatment costs from their employer. Other illnesses such as stress or mental anguish could also result in a claim from an employee. This policy is very affordable, and most insurers throw it in almost as a freebie, so it’s typically packaged with the Public and Statutory Policies, which is what we’ve done for ICNZB members.

Cyber Insurance

This policy is becoming more and more important as it provides cover to small businesses for “cyber” exposures such as viruses, ransomware, data theft, hacks and even some business interruption cover.

Many small business owners think they have no exposure as they are too small to care about.  But small businesses are often targeted by hackers as their cyber security is likely to be a lot less robust than that of say KPMG, Deloitte etc.

Bookkeepers also hold or have access to a lot of valuable information on third parties. This is often very attractive to hackers and can be sold on the dark web. New Zealand now has mandatory reporting laws so in the event you are hacked and lose third party information there will be a cost relating to notifying those involved as well as potential fines if it isn’t don’t correctly. Cyber insurance is fast becoming as important if not more so than Professional Indemnity for many companies.

Fire & General Insurance

These are policies to cover your physical assets such as your office and contents, mobile electronic devices, business interruption and commercial motor vehicles. New Zealand is prone to earthquakes and more and more floods, so it is important you have your physical assets insured.

Personal or domestic insurance.

Members should also think about their homes, contents personal vehicles etc. It’s very hard to work if you lose your house to a fire or flood. By placing these policies through a broker such as Abbott you have someone advocating on your behalf with insurers if the worst happens.

The answer to this is in relation to members Professional Indemnity insurance. We recommend members hold no less than $1m. This sum insured allows for there to be enough insurance should you face a slightly complex or messy claim that ends up in court.

In recent years we have seen the cost of defence skyrocket along with court costs. So $1m should be sufficient to provide defence and in the worst-case defence as well as reparations to a third party. The package currently has the option of a $1.2m limit of indemnity so this is the limit they should be taking.

Yes, we can make insurance easier on your cash-flow. Abbott has its own premium funding option so members can spread the cost of their insurance over either 10 or 12 monthly instalments.  There is no other security required when applying for premium funding as the policy itself provides the security.