Professional Indemnity (or Professional Liability Insurance)
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Professionals – You Are Accountable!
Today’s professionals operate in an environment of increased responsibility and accountability; a situation which can lead professionals into serious legal pitfalls. More and more professionals now accept the likelihood that they may face litigation at some stage during their career and wisely, they are seeking protection in the form of professional indemnity insurance
Any professional person or consultant providing advice or services is exposed to claims of a ‘professional indemnity’ nature. Incurring legal liability can prove financially crippling to a professional’s business, and this damage is often compounded by loss of reputation. Even when a professional has been cleared of any liability to compensate a claimant, the cost of defending such a claim is onerous and seldom fully recovered
What does Professional Indemnity (or Professional Liability Insurance)?
It covers Legal Liability and Legal Cost and Expenses
• Legal Liability
To indemnify the Insured against legal liability for any Claim for compensation first made against the Insured during the Period of Cover for breach of professional duty in the conduct of the Professional Business Practice carried on by or on behalf of the Insured by reason of any negligent act, error or omission committed or alleged to have been committed on the part of the Insured.
• Legal Cost and Expenses
To pay the Costs and Expenses incurred in the defence or settlement of any Claim covered by the Policy.
Professional Liability (or Professional Indemnity) Insurance also provides indemnity for claims involving
- Libel and Slander
- Loss of Documents
- Intellectual Property
- Joint Venture Liability
- Consultants, Subcontractors and Agents
- Outgoing Principals Indemnity
- Newly Created or Acquired Entity or Subsidiary
- Run-Off Cover Insured Entity or Subsidiary
- Estates and Legal Representatives
with additional premium it also provides optional extensions ·
Fraud and Dishonesty of Employees
Previous Business Cover
What do need Professional Indemnity (or Professional Liability Insurance)?
Any person or organisation who provides advice and/or services requiring special skills and knowledge
Real Estate agents
Child Care centres
• The Advertising Agency
An advertising agency was organising a big campaign for a client for the launch of a new product. The campaign consisted a series of TV commercial. Each week a new commercial would be broadcast and over time the “story” would unfold. Unfortunately, the agency mixed up the labelling of the ads and the second week’s episode was aired prior to the first. The client insisted that the agency pay for the extra air time required to rectify the situation.
• The Valuer
A valuer negligently overvalued a commercial building, and mortgage finance was advanced on this recommendation. The borrower subsequently defaulted, obliging the lender to put the property up for mortgagee sale. To recover the deficit, the lender sued the valuer
• The Engineer
An engineer was engaged to carry out the structural design of a large sports complex. Halfway through the construction, it become apparent that the complex would not be structurally sound and would have to be re-designed. All the construction work that had taken place had to be demolished. The engineer was clearly liable and paid for all resulting losses.
• The Architect
An architect drew up plans for building which a property developer had been commissioned to build, accordig to certain specifications. Once completed, the purchaser refused to settle the contract, alleging that the buiding did not meet the agreed specfications. The developer was able to find another buyer, but for a much lower price. The developer sued the architect for the difference, together with his additional costs.
• The Health & Safety Consultant
A health and safety consultant was contracted by a big manufacturing company to assess their production system and advice on improving the safety of the factory. There had been a recent spate of accidents which the company was determined to avoid in the future. The consultant inspected the work area and produced a report highlighting various changes to made. All recommendation were followed by the company, some of which involved modifying the design of production line. However, the company soon realised that the new set-up potentially hazardous in a completely different way and sued the consultant for the cost of rectifying the problem.
• The Mortgage Broker
A first-time home buyer consulted a mortgage broker to arrange a mortgage on the best term available in the market. After the broker finalised the mortgage with a certain bank, the buyer discovered that another bank had been offering a lower interest rate, and there were no fees. The buyer claimed against the broker for the fees incurred, plus the cost of the interest for the difference in the two rates over the period during which his rate had been fixed.
• The Forestry Consultant
A forestry consultant was hired to manage a forest. He developed a program including appropriate times for pruning, which was strictly followed. The trees did not seem to thrive so the forest owners called in another forestry expert who was “horrified” at the advice given by the consultant. As the timber porduced was no longer going to be export quality because of the large-sized knots in the wood, the forest owners sued the consultant for damages.
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