Professional indemnity insurance, claims basis and run off !

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motozed

13 posts

Geek

#84742 7-Jun-2011 15:46

After reading some articles and wordings of insurance, as an IT contractor, I understand this means the insurance doesnt cover me for when a situation may occur, but when it is claimed on. WHOAH !

So in essence I would need to take the insurance forever, but then I read wording about run off insurance.

Is anyone familiar with this insurance and can explain how to go about it if you are only taking on a short term contract? Not looking for legal advice, just what the general practise involves.

NonprayingMantis

6434 posts

Uber Geek

#478585 7-Jun-2011 15:51

that sounds about right. My sister has the same situation in medicine when she quit to be a mum full time. Still needs malpractice insurance even though she isn't working

however bear in mind there is probably a statute of limitations for when claims can occur, so it doesn't mean you need to keep it forever. not sure how long that is in NZ though.

motozed

13 posts

Geek

#478609 7-Jun-2011 16:25

lets say i take a contract for 5 months, then the other 7 months i am unemployed. i still need to take insurance for the 12 month period, and i will need to take insurance for the remainding period of time until statute of limitation kicks in (is that like 7 years or something?). so really for a short term contract one needs to consider a very long term view of taking out the insurance? WHOAH !

CYaBro

4583 posts

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#478621 7-Jun-2011 16:53

What, as an IT contractor, do you need to keep insuring for though once you have finished the job?
Surely you would have some sort of contract/agreement, with the company, that has some sort of sign-off or something that you both sign once the job/contract is complete and they would be signing to say that everything is complete and working as they required and to their satisfication so you can't be held liable for anything that happens after that?
Or at least have some date in the future as to when your liability ends??

Opinions are my own and not the views of my employer.

Dratsab

3946 posts

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#478626 7-Jun-2011 17:23

Your best bet would probably be to contact your (potential) insurer to find out about the lifetime of limitations and get their word in writing.

jjnz1

1363 posts

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#478627 7-Jun-2011 17:23

Your terms of engagement contract should state when you need insurance, how much, and for how long after the work is complete. It is normal.

Generally a contractor will be contracting indefinitely (over multiple jobs), so ongoing insurance would be the norm.

I would recommend insuring for 12 months after your contract ends. This is normally long enough for most standard contracts.

Are you insuring for $1M or $2M?

motozed

13 posts

Geek

#478664 7-Jun-2011 18:47

it all seems a bit of a gray area as the statute of limitation applies to when the problem occured not when the work was done, thats my understanding but i could be wrong. google professional indemnity run off insurance.

im not sure what my liability sum will be. but the cost o insurance alone makes a massive dent in the benefit of being a short term contractor (placed by an agency) as i see it.

motozed

13 posts

Geek

#478790 7-Jun-2011 23:01

jjnz1: Your terms of engagement contract should state when you need insurance, how much, and for how long after the work is complete. It is normal.

Generally a contractor will be contracting indefinitely (over multiple jobs), so ongoing insurance would be the norm.

nope nothing in the contract or agreement other than i take full liability not the agency.

im not sure if i will contract again in nz or not, thats the real problem, is the short term contract worth it to me in comparison to the cost of the years of PI insurance. and for that matter i cannot find anything definitive on how many years i would need to keep renewing the PI policy for afterward.

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NonprayingMantis

6434 posts

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#478793 7-Jun-2011 23:16

you just need to make sure you build the cost of the PI insurance into your contract rate.

motozed

13 posts

Geek

#478806 7-Jun-2011 23:42

NonprayingMantis: you just need to make sure you build the cost of the PI insurance into your contract rate.

thanks, appreciate what your saying.

how long do i estimate the PI insurance for, 7 years, 20 years? for a short term contract it could be a big cost/headache.

it is strange to me paye options by the agencies are not more common in nz. would make it easier if u just plan on doing short term roles with breaks in between etc.