Professional Indemnity
Liability for financial loss caused to a client by negligent advice, design or professional service.
Also calledProfessional Indemnity · Errors and Omissions · E&O
First thing, todayNotify on the allegation, not on the lawsuit. These are usually claims-made policies and the date you knew is the date that counts.
- Tell the insurer now, not after the assessment.
- Admit nothing and settle nothing and pass every letter to the insurer the day it arrives.
- Every document within the time the insurer asks for it.
When you would claim
- A client alleges negligent advice, design or workmanship
- A demand for compensation, however informal
- Circumstances that might give rise to a claim later
- A regulatory or disciplinary complaint where covered
What insurers most often rely on
- Late notification on a claims-made policy, which is the commonest failure on this cover by a distance
- Circumstances known before inception and not disclosed
- Work outside the professional activity described in the schedule
- Liability assumed under a contract beyond common law
- A deliberate act, or a fee dispute dressed as a claim
On a liability claim these are opening positions. Opening positions are argued, and the insurer expects them to be.
The documents
half of it belongs to the other side10 items, and half of them are somebody else's. Get the allegation in writing early: an insurer cannot tell you what is covered until it can read what is being said against you.
- Claim form and the client's letter or notice
- The engagement letter, scope of work and terms of business
- The deliverable complained of, in the version issued
- The full project or matter file, in date order
- Records of advice given and instructions received
- Any expert or peer review already obtained
- Details of when the business first became aware of the problem
- Cancelled cheque and bank details in the insured's name, for the NEFT payment
- Details of any other insurance covering the same risk
- The allegation in writing, and what the client says it cost them, kept separate from what they say you should have done
Next
Liability Claim: The First Response
In liability, the damage is usually done in the first conversation, by somebody being decent and apologetic to a person who has been hurt.
Most often lost by: Admitting liability.
Read the limit of indemnity
No sum insured and no average clause. A liability policy is capped by its limit of indemnity, written as one figure for any one accident and a larger one for the year, with defence costs sometimes inside that limit and sometimes outside it. Which of the two it is matters more than the figure.
Filed under: Liability · Third-party and legal claims
Claims that sit next to this one
the same allegation, answered elsewhereDirectors' and Officers' Liability
the decision rather than the advice
Public Liability
injury and damage, as against financial loss
Cyber and Data
a client's loss that began with a breach
Had a notice and not replied to it yet? Report a loss or call 92514 56334.