PROFESSIONAL LIABILITY INSURANCE – MISCELLANEOUS

The policy insures ‘professional’ persons or associations/partnerships for their legal liabilities to third parties arising
from their professional negligence or that of their employees.
The types of ‘profession’ to which this insurance applies are:
 solicitors;
 accountants;
 architects and surveyors;
 insurance and stock brokers;
 medical doctors, dentists and other medical practitioners.
THE COVER: Professionals may fail to exercise the skill and care that is expected of them – this skill and care is
above and beyond the ‘normal’ duty of care. Professional indemnity cover is for ‘Loss arising from a
breach of professional duty by reason of any negligent act, negligent error or negligent omission’.
The main elements of the professional indemnity cover will typically consist of:
 legal liability/civil liability involving payment of;
 damages,
 claimant’s costs and expenses,
 defence costs;
 libel and slander (negligence does not have to be proven for a claimant to succeed with a libel and slander
action);
 dishonest, fraudulent or malicious act of employees;
 loss of documents;
 compensation for court appearance.
Claims Administration: Policies are issued on a ‘claims made’ basis, which means that the claim must be made or
reported to the insurer during the period of insurance. Example of the operation of the claims made basis of cover
Hypothetical Case history
2001: – architect designed a house
2002: – house erected as per the design
2003: – cracking appears on the walls
2004: – writ served on the architect alleging negligent design
2001: – the claim was caused
2003: – the claim occurred
2004: – the claim was made
It would be the 2004 policy that responded to the claim. If there was no policy in force in 2004 there would be no
cover.
EXCLUSIONS
 Liability covered under a Public Or Product Liability;
 Fidelity guarantee;
 Loss of documents;
 Consequential loss;
 Liability arising out of pollution or contamination of any kind;
 Activities in connection with fairs and/exhibition, grounds boundary surveys, survey of sub-surface conditions;
 Estimation of quantities and qualities/arranging/handling materials;
 Atomic works, mining, dams, tunnels, bridges, offshore work;
 Losses arising out of physical acts of the insured, their agents/employees in respect of third party injury or
destruction of property;
 Losses associated with ownership, maintenance or operation of aircraft, boat, automobile;
 Insolvency; and War and related peril.

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