Professional liability indemnity insurance

Abstract

For many people the term 'professional indemnity insurance' is a very special form of cover arranged for members of the established professions and in countries like the UK and US have carried this protection for years. Claims awareness has increased rapidly throughout Europe and it has been more striking in Germany, the Netherlands, France, Belgium and Spain. Although the frequency of claims is rising, the propensity to sue in certain countries is still low compared to the US where there is a far greater willingness to sue for personal financial gain. Professional Indemnity cover is increasing amongst professionals even in Malta and is considered as one of the several recent developments marking the progress towards the achievement of professional status. Sometimes, the holding of professional indemnity cover is a mandatory requirement by law with regards to members of certain professions. However, regardless of whether it is mandatory or not it is generally accepted that it is a sound business practice that can protect from bankruptcy, forced liquidation or in any case from adverse effects consequent to the payment of a considerable sum of money. The main purpose of this thesis is to examine the wording of professional indemnity insurance policies offered by local insurers and to attempt to determine the limit and extent of cover afforded to the insured professional. The first chapter deals with an examination of the nature of professional liability both from a civil and a criminal perspective. The second chapter deals with the proposal form, its nature, contents and legal effect. The basic importance of the proposal form is that the answers given by the proposed insured will determine whether the insurer will accept the risk and also the determination of the premium to be paid.