Professional Indemnity insurance provides indemnity for the cost of claims brought against your company, you, or your employees, when a client or third party alleges you have: breached your professional duty, not completed your services satisfactorily, or there has been a breach of duty because of a specific act, error or omission.

Professional indemnity insurance also covers the legal costs and expenses for your defence, as well as any damages or costs awarded.

Insurance should be in place before a problem is identified as it could be some time after the alleged mistake was made that a claim is made against you.

Public Liability insurance covers loss as a result of legal liabilities to pay compensation to third parties for personal injury or property damage.

This is quite distinct from any losses arising from a breach of professional duties.

The cover is intended to cater for civil claims arising from "accidents" or "occurrences" in business that can cause either property damage or personal injury to members of the public.

Also included within the protection is an extension for punitive or exemplary damages in respect of bodily injury to members of the public.

The main cover provisions include:

• Legal liability to pay compensation in respect of Personal Injury or Property Damage worldwide, but excluding liabilities incurred within the USA or Canada or their territories or protectorates.

• Legal Costs and Expenses of defence incurred with the Insurers’ consent.

The automatic extensions include:

• Landlords Liability

• Tenants Liability

• Vibration & Removal of Support

• Exemplary Damages Liability for Bodily Injury

• Indemnity to Principals, Lessors, Grantors and the like

Some of these extensions are subject to certain sub-limits of indemnity within the basic level of indemnity.

Please be wary of any tax liabilities

In accepting appointments as Trustees, lawyers must ensure that any tax liabilities of the Trust are, in fact, commensurate with the personal tax liabilities of all of the Trustees.

Any statutory demands for payment of taxes, use of money interest or penalties for non-payment are significant personal risks that are basically uninsurable under Professional Indemnity or any other liability policies (i.e. they are not demands for compensation by a Client in a Civil Court).

The IRD can make its statutory demands against any one or all of the Trustees of a Trust as an example. Lawyers should understand that as Trustees, in the event of a Trust having insufficient assets to meet its tax liabilities, they could become personally liable along with the other Trustees for that tax.

The Accident Compensation Act 2001 and its amendments provide compulsory statutory coverage for personal injury to employees caused by “accidents”. The Employers Liability Insurance is designed to include the costs of defence and any compensation awards to employees for personal injuries falling outside of the scope of the Accident Compensation Legislation.

Some of the risk exposures to Employers that may fall outside of the scope of the legislation can be as follows:

• Mental anguish without physical injury

• Stress without physical injury

• Viruses transmitted through air conditioning

• Exposure to other gradual processes such as OOS (only one month of disability only is covered by the Act) 

This policy is designed in two sections:

1. Legal costs and awards against employers following claims by current, former or prospective employees for breach of employment contracts and breach of certain provisions of the Human Rights Act 1993 and the Privacy Act 1993.

2. Legal costs incurred in the defence of injunctions or applications for reinstatement brought against employers by current, former or prospective employees.

Members should note that for indemnity to be available under this policy there are requirements for members to give prior notification to the Justitia Insurers of:

• any steps to instigate any disciplinary, demotion or redundancy procedures in respect of any employees; and

• to follow the Justitia Insurers’ directions in such regard.

This policy is aimed at picking up certain “residual commercial risks” that may fall outside the scope of Professional Indemnity insurance as a “difference in conditions” to augment the Professional Indemnity cover (e.g. to cover the liability you may have for the “wrongful acts” of the other Directors and/or other matters that may fall outside the scope of Professional Indemnity Cover).

The Limit of Indemnity available for any one claim and for all claims during the period of insurance is the equivalent of $100,000 per declared Director’s appointment subject to a maximum that is equal to the selected Professional Indemnity Limit of Indemnity.

The Deductible is subject to a minimum of $10,000 each and every claim but does not apply to Defence Costs.

This policy is aimed at picking up certain “residual commercial risks” that may fall outside the scope of Professional Indemnity insurance as a “difference in conditions” to augment the Professional Indemnity cover (e.g. to cover any liability for the “wrongful acts” of the other Trustees and/or other matters that may fall outside the scope of Professional Indemnity Cover).

The Limit of Indemnity available for any one claim and for all claims during the period of insurance is the equivalent of $100,000 per declared Trustee appointment subject to a maximum that is equal to the selected Professional Indemnity Limit of Indemnity.

The Deductible is subject to a minimum of $10,000 each and every claim, but does not apply to Defence Costs.

This extended coverage is not intended to apply to any trading trusts, whereby a company is the sole trustee or to appointments to the Board of Trustees of any School (which is not actually a Trust in the legal sense, being a separate legal entity established by Statute i.e. the Education Act 1989 which contains certain exemptions from personal liability). If you require clarification on this please seek advice from one of the Justitia Insurance Consultants.

Item descriptiThe Justitia Professional Indemnity Policy does not contain any specific exclusion relative to a loss arising from civil liabilities when providing professional advice or services through the use of the Internet or E-Commerce communications.
 

However, other liabilities and losses can occur for a Member Firm including the transmission of viruses to various other sites, defamation, infringement of intellectual property, breach of copyright, confidentiality, transmission of obscene material and other issues arising from the non-professional or non-work related activities of staff with access to the Internet, email or any Electronic Network.
 

In Addition, firms are now at risk of computer hacking often accompanied by extortion threats which if publicised can lead to a leak of public/client confidence.
 

To download further information on Cyber Risk Insurance for Professional Services, click here.
 

To download the document to get a Cyber quote for Justitia Members, click here.on