The following Insurance & Reinsurance practice note provides comprehensive and up to date legal information covering:
Professional indemnity insurance is a form of liability insurance. It provides a professional person or business with an indemnity against claims or losses arising out of negligent acts, errors or omissions connected to the insured professional practice. Professional indemnity insurance typically also extends to the acts, errors and omissions of past employees.
Some professions, ie solicitors, accountants and architects, are required to have professional indemnity insurance by law. However, professional indemnity insurance should be held by any individual or business that provides advice, designs or services in a professional capacity.
Professional indemnity insurance is typically designed to cover claims for damages made by a client arising out of the ordinary course of the insured’s professional services.
For further information, see Practice Note: Liability insurance.
Professional indemnity insurance policies operate on a ‘claims made’ basis. This means that the policy is triggered when the policyholder becomes aware of and notifies insurers of a claim or circumstance that may give rise to a claim, as opposed to when the acts or omissions giving rise to the potential liability occurred.
This diagram illustrates how a ‘claims made’ policy operates as opposed to a ‘losses occurring’ policy.
The insured design and build contractor was involved in a project during May 2016. In 2021, it was put on notice of number of issues arising
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