What does Civil Liability mean in my Professional Indemnity Policy?
What is the difference between a Civil Liability wording and a Negligence wording in my Professional Indemnity Policy?
What does Civil Liability mean? You may have heard its “broader cover” but why?
In its very simplest form under a civil liability wording if a claim isn’t specifically excluded then it is assumed to be included!
It is considered to be a broader wording as the interpretation of what could be considered a claim tends to be wider
Why is this significant?
This is significant to your policy as rules and legislation change often and most businesses may not always be aware of them. Consequently if an insured is found liable for damages in a civil court due to their advice they “may” be covered – even when it is not specifically included in the policy – as long as it’s not an exclusion it could be a Professional Indemnity claim.
The 4 main areas of Civil Law include:
• Tort Law (negligence, nuisance defamation)
• Contract Law (breach of conduct)
• Statutory Law (consumer protection legislation)
• Equity (principle of fairness)
So what is a Negligence Wording and how does it differ?
Again in its simplest form – if a claim in not specifically included……. That’s right…….it is excluded.
The intention of a Negligence wording is to cover losses where it can be shown that:
(i) the insured owed a duty of care to the claimant
(ii) they breached that duty and
(iii) their breach caused a financial loss
But more importantly it needs to be proved that the insured was indeed “negligent” and breached their standard of professional care.
This is ok if a breach falls under the Tort of Negligence but what if claim is due to other legal grounds such as libel and slander, copyright infringement or misrepresentation?
These do not fall under the tort of negligence and could be denied by the insurer.
Therefore, a Negligence wording differs from a Civil Liability wording in as much as its considered to be more restrictive in its scope of cover as, negligence is not the only basis of coverage.
Fundamentally the difference lies in the nature of the liability – a Civil Liability will focus on the nature of the liability whereas a Negligence wording will focus on the actual conduct of the insured – but remember in both wordings it always needs to relate back to the client’s professional services and as always, make sure you carefully read the applicable policy wording.
Source: Solutions Underwrtiting
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