What do Professional Indemnity policies cover ?
Defence Costs associated with covered claims.
Continuous cover – provides cover in certain situations for known circumstances arising prior to the period of insurance, as long as the insured was continuously insured with the same insurer and was insured at the time they first became aware of the known circumstance.
What is a claims made policy? How does it differ from an occurrence policy?
A 'claims made' policy requires all claims to be notified to the insurer within the period of insurance. The actual mistake could occur at any time, if there is unlimited retrospective cover, or otherwise it must occur during the period of insurance. The insured must not have had any prior knowledge of a fact, situation or circumstance before the period of insurance, which relates to a claim which may be made against the insured. Claims and claims arising from a 'known circumstance', occurring prior to the period of insurance, are normally excluded from a 'claims made' policy. 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.
What is 'run off' cover? How many years should I take out 'run-off' cover for?
'Run Off' cover will indemnify an insured for claims first brought against the insured during the period of run off insurance, arising from mistakes allegedly made by an insured, in the course of their former professional practice.
How many years should a professional maintain 'Run Off' cover?
There is no 'hard and fast' rule applicable to every professional, however it is suggested that cover should be maintained for at least six years. Although, in some cases the Limitation Period may only be three years, in other situations, it may be considerably longer.
For example, the time from which the Limitation Period commences may be delayed until the discovery of damage where the defect or damage is latent. Asbestosis, brick growth and concrete cancer are all examples of latent defect or damage. For this reason, construction professionals e.g. engineers, project managers, builders etc should consider having 'Run Off' cover beyond six years because an injury or damage may occur or be discovered many years after their involvement with the construction of a building has passed.