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Professional liability question

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01 May, 2021 by  devilscream

Hi all

I've got the following fragment in my insurance:

"We agree to pay on your behalf all sums which you become legally obliged to pay (including liability for claimants' costs and expenses) as a result of any claim first made against you during the period of the policy arising out of your professional activities (...)".

Let's say I am providing my services to my Client.

My Client is providing his services (I am my Client's sub-contractor) to another Company.

What happens if that Company makes a claim against my Client? Does my insurance cover such a case, where my Client's insurance turns out not "big enough" (i.e. the liability limit of his own insurance is exceeded)?

I just want to understand what does "claim first made against you" means.

Best regards

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2 Answer


If there is a professional negligence on your part that causes financial loss to the company, the company can file a compensation claim against your client. Your client in turn can sue you for the loss he has suffered in defraying the expenses to the Company. Thus a claim is made against you by your client.

The Company cannot directly take action against you since there is no privity of contract between you and the Company.

It there is no professional negligence attributable to you, there is no claim admissible. Your negligence must be proven. However the professional indemnity policy will pay for defence costs incurred even if you are not held liable.

Hope this helps.

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04 May, 2021


I'll try and answer your question "Does my insurance cover such a case, where my Client's insurance turns out not "big enough" (i.e. the liability limit of his own insurance is exceeded)?"

Your insurance will not be triggered unless someone sues you. In the above scenario, your client will have to sue you, for your insurance to trigger.

Rest, Mr. Hari has explained in detail how a Professional indemnity policy works.

Hope this helps!

Cheers :)

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