NTAA PI Frequently Asked Questions
This specialised area of insurance can be complicated and difficult to understand so, to make it easier for you, we answer what we believe are the most frequent questions asked of a broker by an insured about Professional Indemnity insurance.
Why does a professional need a Professional Indemnity policy?
A professional will hold himself or herself 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 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.
What is a Claims Made policy? How does it differ from an Occurrence policy?
A 'claims made' 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.
Why do I have to fill out a proposal form?
Generally, before a quote can be given for professional indemnity insurance, underwriters will 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.
What is Continuous cover? When do we offer this cover?
This is, in effect, a loyalty bonus. It means that if someone who was insured with us in unbroken successive periods notifies a claim circumstance in the subsequent period which should have been notified in the earlier period, then that claim will be covered under the latter policy but subject to the lesser limit of the two applicable policies. Issues of non-disclosure and known circumstance exclusions will not be raised, however, prejudice due to delayed notification may be taken into account in the adjustment of the claim.