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Who
is a professional?
Anyone who gives to another person
advice and/or services of a skilful character
according to an established discipline might
be regarded as a 'Professional'. That means
persons other than those in 'traditional'
Professions, such as doctors and lawyers,
are now considered to be Professionals i.e.
Computer consultants, advertising agents,
acoustics consultants, trade associations
and fund managers.
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Why
does a professional need a professional indemnity
policy?
A Professional will hold himself
or herself out as having a special skill,
which can be relied upon by another. Consequently
the law requires that the Professional exercise
the required skill to an appropriate level
expected by that profession. Professionals
are only human and mistakes do happen. Any
financial loss, injury or damage arising from
a mistake or failure by the Professional to
exercise the required level of skill may mean
that an award is made in favour of a person
who suffers a loss, damage or injury. A Professional
may also be held to be liable for a mistake
even though there was no negligence.
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What
protection will a professional indemnity policy
provide?
A Professional Indemnity policy aims
to shield the Professional's assets in the
event of a claim therefore ensuring that he/she
is able to carry on their business. Every
policy on the market is different. You need
to compare each policy.
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What
is a 'claims made and notified' policy? How
does it differ from an 'occurrence' policy?
A 'claims made and notified' policy
requires all claims and any fact, situation
or circumstance that results in a claim, to
be notified to the Insurer within the Period
of Insurance. The actual mistake could occur
at any time, if there is retrospective cover,
or otherwise it must occur during the Period
of Insurance. The Insured must not have had
any prior knowledge of the fact, situation
or circumstance before the Period of Insurance.
In an "occurrence" wording (as for
Public Liability policy wordings), the circumstance
must occur during the Period of Insurance
whilst the notification of this event can
occur at any time subsequently.
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What
fact, situation or circumstance should I notify
to an insurer?
Any fact, situation or circumstance,
which a reasonable person in the Insured's
professional position would have thought,
might result in someone making a claim against
him/her.
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What
does a civil liability professional indemnity
wording cover?
A 'civil liability' wording will
indemnify the Insured for claims arising from
any civil award imposed by a civil court,
as opposed to criminal liability or penalties
enforced by a criminal court. A Civil Liability
Professional Indemnity wording is broader
than a 'negligence wording', as it will indemnify
the Insured for claims arising from strict
liability, where no negligence is involved.
- Why do I have to
fill out a proposal form?
Generally before a quote can be given for Professional
Indemnity Insurance, underwriters will require
certain information in order to understand the
Insured's profession and all the characteristics
of the Insured's business. The information provided
in the proposal either forms part, or all, of
the information that an underwriter will rely
upon to provide a quote. Generally each Insured
is quoted individually, since one Insured's
circumstances (i.e. the type of profession,
type of work performed, number of years in the
profession and experience) may vary considerably
from another.
- What does 'costs
inclusive' excess and 'costs exclusive' excess
mean?
Costs Inclusive Excess means the Insured
must pay the amount of the Excess towards the
legal and defence costs. Costs Exclusive Excess
means the Insured does not pay any excess towards
the legal and defence costs but only pays the
amount of the Excess towards the settlement
of any Claim.
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What is the retroactive date? What is the
date of inception?
Retroactive date is the date after
which acts, errors or omissions of the Insured
are covered. That is, any act, error or omission
arising from work done after the Retroactive
date will be covered under the Policy. The
Inception date is the date of the start of
the Policy Period.
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What
is run off cover? How many years should I
take out run off cover for?
If an Insured chooses to sell his/her
business and retire, then 'Run Off' cover
will indemnify them for any unknown claims
arising during the Period of Run Off Insurance,
arising from mistakes made whilst they were
still in business. It does depend upon the
Retroactive date offered with the policy.
It is difficult to suggest the length of time
that 'Run Off' cover ought to be taken out,
as it depends upon the Statute of Limitations
legislation applying to that particular claim.
In some cases a claim can be brought in excess
of 15 years after the mistake occurred.
- What is continuous
cover? When do we offer this cover?
This is, in effect, a loyalty bonus.
It means that if someone who was insured with
us in unbroken successive periods notifies a
claim circumstance in the subsequent period
which should have been notified in the earlier
period, then that claim will be covered under
the latter policy but subject to the lesser
limit of the two applicable policies. Issues
of 'non-disclosure' and 'known circumstances'
exclusions will not be raised, however prejudice
due to delayed notification may be taken into
account in the adjustment of the claim.
- What is automatic
reinstatement?
Unlike other forms of liability policy,
the sum insured of the professional indemnity
policy is limited so that the limit applies
to the aggregate of all claims against the policy
in the policy period. The automatic reinstatement
allows this aggregate limit to be doubled while
the limit for any one claim remains the limit
of the sum insured.
- What is meant by
a 'known circumstance'?
Claims arising after the policy inception
which arise from circumstances which the Insured
knew (or should have known) at the time of the
policy inception may give rise to a claim, are
excluded. This is because such claims are not
fortuitous at the time of entering into the
insurance but, on the contrary there is a real
possibility that a claim may eventuate.
- What is the difference
between jurisdiction and territorial limits?
These two terms are sometimes confused.
Territorial Limit refers to the place where
the act, error or omission occurs. Jurisdiction
Limit refers to the fact that the policy will
only cover claims brought within the court system
of the nominated countries.
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