Taking on contract work means you carry your own risk - there is no employer's insurance policy behind you if you damage property, give faulty advice, or someone is hurt during your work. This guide covers the insurance independent contractors in NZ need, why clients and agencies increasingly require proof of it before they will sign you, and how to get sorted fast.
This guide is general information for NZ businesses, not financial or insurance advice. Cover, limits and exclusions vary between insurers - always read the policy wording and consider talking to a licensed insurance broker or financial adviser before you buy.
Why contractors need their own insurance
As an employee, your employer's public liability and professional indemnity policies usually cover work you do on the job. The moment you move to contracting - whether you are a self-employed builder, an IT consultant placed through an agency, a freelance designer on a fixed-term project, or a labour-hire worker on a client site - that umbrella disappears. You are running your own business, and the risk sits with you personally.
Clients and agencies have updated their contracts to reflect this. It is now common to see a clause requiring you to hold a minimum level of public liability - often $1 million to $5 million - and sometimes professional indemnity, before you can start work. There is no single NZ law that requires it; it is a commercial condition written into the contract. If you cannot produce a certificate of currency showing you hold the required cover, you may lose the engagement before you start.
What ACC does and does not cover
ACC covers personal injury caused by accident - so if you fall on a job site, ACC pays your treatment costs and a portion of your lost earnings (up to 80 percent, subject to a cap). As a self-employed contractor you pay ACC levies each year, which funds this entitlement.
What ACC does not cover matters just as much: it does not cover illness, damage to a client's property, financial losses your clients suffer, your own tools and equipment, or income lost for any reason other than an accidental injury. That is a substantial gap, and it is why private insurance policies exist alongside ACC. If you are worried about income during a long illness or a recovery period that stretches beyond what ACC will cover, income protection insurance is worth exploring. See types of business insurance for an overview of all the main options.
The main covers contractors should consider
| Cover | What it does for a contractor | Who needs it |
|---|---|---|
| Public liability | Pays third-party claims for property damage or bodily injury you cause | Almost every contractor, especially trades and anyone working on client sites |
| Professional indemnity | Covers claims that your advice, design, or professional service caused a financial loss | IT, consulting, engineering, creative, and any advice-based work |
| Tools and equipment | Replaces or repairs your own tools if stolen or damaged | Trades, photography, AV, and anyone with expensive portable gear |
| Business interruption | Helps cover lost income if you cannot trade due to an insured event | Contractors relying entirely on their own labour for revenue |
| Income protection | Pays a monthly benefit if illness or injury stops you working | Any sole-trader contractor without sick leave entitlements |
Public liability for contractors
Public liability is the most commonly required cover for NZ contractors. It pays out if you accidentally damage a client's property or cause injury to a third party while doing your work. A minimum limit of $1 million is standard, but many larger clients and government contracts require $2 million or $5 million before they will let you on site.
For trades contractors - electricians, plumbers, builders, landscapers, and similar - public liability is essential. A single incident involving a burst pipe, an electrical fault, or a structural problem can result in a claim worth far more than your annual earnings. See our full guide to public liability insurance for detail on limits, exclusions, and how claims work in practice.
If you operate as a sole trader, the stakes are higher still. There is no company structure separating your personal assets from a liability claim, which makes cover even more important. Our guide to public liability insurance for sole traders covers what that means in practice and what level of cover to consider.
Professional indemnity for contractors
Professional indemnity (PI) covers claims that your advice, design, or professional service caused a client a financial loss. If you are an IT contractor whose deployment causes problems, a consultant whose recommendation leads to a costly decision, or a creative contractor whose deliverable misses a contractual brief, PI insurance can cover legal costs and any damages awarded - even if you ultimately are not found liable.
PI is increasingly required in professional services contracts, particularly IT, engineering, architecture, and management consulting. Even where a client does not require it, defending a claim without cover can be expensive. Our guide to professional indemnity insurance explains policy structure, retroactive dates, and what to check before you buy.
Cover for specific types of contractors
Risk varies with the type of contracting work you do:
Trades contractors typically need public liability as a minimum, with many adding tools cover and income protection. If you employ other people on your jobs, employers liability cover is also relevant.
IT and tech contractors often need both public liability and professional indemnity. Agencies and large corporates placing IT contractors almost always require both before they will sign an agreement.
Consulting and professional services contractors - accountants, engineers, HR consultants, project managers - face significant professional indemnity exposure. Clients can raise a claim years after an engagement ends, so ongoing cover matters.
Creative contractors - designers, photographers, videographers, copywriters - may need public liability when working on client sites, professional indemnity if producing work to a deliverable brief, and equipment cover for cameras and production gear.
Labour-hire and agency workers operating through a staffing agency should check whether the placing agency requires them to hold their own cover before starting a placement, and what gaps exist in the agency's own policy.
For a profession-by-profession breakdown of what cover is typically needed, see business insurance by profession.
Getting cover and proof for clients
Once you know what you need, getting covered is quick. You can compare contractor insurance with BizCover - get quotes from multiple insurers and buy online in minutes. Once you purchase, you receive a certificate of currency you can email to your client straight away, removing the last barrier before work can start.
For more complex situations - a larger contracting operation, employees on the tools, or high-risk trade work - a licensed insurance broker can help you check that limits and exclusions are right for your circumstances. business.govt.nz also has useful guidance on obligations for self-employed people in NZ, including what records to keep and how ACC levies work.
For a broader look at building an insurance package as a small business, see small business insurance.
Frequently asked questions
Do independent contractors need insurance in NZ?
There is no single law requiring NZ contractors to hold insurance, but many client contracts and agency agreements make it a condition of engagement. Even where a client does not require it, holding public liability cover protects you personally if something goes wrong on the job - and as a sole trader, there is no company structure between you and a claim.
Why does my client require public liability insurance?
If you damage a client's property or cause injury while working on their behalf, they want certainty there is a policy that can cover the cost. It also means they do not have to pursue you personally if a claim arises. Most clients set a minimum limit - commonly $1 million to $2 million - in the contract, and require you to show a current certificate before you start.
Do I need professional indemnity as a contractor?
If your work involves giving advice, producing designs, writing specifications, or delivering a professional service that clients rely on financially, professional indemnity is worth serious consideration. A claim that your advice caused a financial loss can be expensive to defend even if you are ultimately not at fault, and many professional services contracts now require PI cover as standard.
What is a certificate of currency?
A certificate of currency is a document from your insurer confirming that a policy is in force. It shows your name, the policy type, the cover limit, and the expiry date. Clients use it as proof you hold the required insurance before letting you start work. Most insurers issue a certificate when you buy a policy and make it available to download from your online account immediately.
Is income protection worth it as a contractor?
As a contractor you have no employer providing paid sick leave, so if illness takes you out of action for weeks or months, your income stops. ACC only covers accidents, not illness - so a serious health issue creates a gap that ACC cannot fill. Income protection insurance pays a monthly benefit if you cannot work due to illness or injury, providing a financial buffer while you recover.