Generally Professional Indemnity insurance provides cover for losses sustained by third parties as a result of a a professional error or omission or a breach of your professional duty. Policies generally also cover:
Extension of cover can also be negotiated for the following:
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.
'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.
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.