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 – e.g. computer consultants, advertising agents, acoustics consultants, trade associations and fund managers.
A professional will hold themselves 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.
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.
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.
Any fact, situation or circumstance which a reasonable person in your professional position would consider may result in someone making a claim against you. (For more information see the article ‘What is a known circumstance?’ in Professional Speaking, the CGU Professional Risks journal.)
It indemnifies 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.
Before a quote can be given for Professional Indemnity Insurance, underwriters generally 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.
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.
Retroactive date is the date