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Prior and Pending Litigation in Professional Indemnity Policy

  The prior and pending litigation exclusion in liability policies is a clause designed to exclude coverage for claims related to legal disputes or circumstances already known, pending, or in progress before the policy's effective date. It’s an important exclusion because it limits the insurer’s liability for events that occurred before the policy began. Here are more details about this exclusion. Purpose of the Prior and Pending Litigation Exclusion Insurers include this exclusion to avoid covering claims or disputes that were known or existed before the policy started. It ensures that the underlying policy , Directors & Officers (DnO), Professional Indemnity (PI) policy, etc., only covers new claims that arise from professional errors, omissions, or negligence occurring during the policy period and not pre-existing or ongoing legal matters. What the Exclusion Covers Prior Litigation : Any lawsuit, claim, investigation, or l
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Mitigation Costs in Professional Liability Policies

  Professional Liability Insurance in India, more commonly referred to as Errors & Omissions (E&O) insurance in the case of businesses, provides the business with insurance coverage against claims of negligence, error, or omission in the services rendered by the business under insurance. In this policy, one of the features includes mitigation cost coverage. Mitigation costs are sums of money that an Insured pays to avoid or lessen the possibility of a claim arising. For example, if a business finds an error in its work that may give rise to a potential liability claim, it may incur expenses to correct such error before it generates a claim. These costs will be incurred in trying to reduce the potential damage or liability and, therefore, may be covered under a professional liability insurance policy. However for mitigation cost section claim to trigger there needs to be a claim payable under the policy. Once the claim is determined to be payable under the policy, the mitigati

Exclusion of insolvency and bankruptcy in D&O policies

Broadly speaking, a D&O insurance policy offers liability cover to companies' directors and officers for claims made by others resulting from decisions and actions made while undertaking their normal duties under the employment contract. The policy includes different types of exclusions; one of them is insolvency and bankruptcy exclusion. The insolvency and bankruptcy exclusion is a provision under a D&O policy that excludes coverage directly or indirectly from the insolvency or bankruptcy of the company. Purpose of the Insolvency and Bankruptcy Exclusion 1. Risk Management: The increased risk associated with a situation involving insolvency or bankruptcy is a consideration noticed by insurers while bringing forth this exclusion. In particular, claims tend to increase at times when a company is undergoing financial trouble and stakeholders are trying to recover their losses. 2. Moral Hazard: The exclusion helps cap moral hazard, whereby directors and officers may take more

Employee fraud and dishonesty coverage in professional indemnity policies

  Professional indemnity insurance, also called errors and omissions (E&O) insurance, gives indemnity to the professionals against allegations of negligence or errors in their professional services. Professional indemnity policies frequently contain certain provisions for employee fraud and dishonesty. The following is an in-depth analysis of how employee fraud and dishonesty coverage aspects are addressed within a professional indemnity policy in India. Employee fraud and dishonesty coverage aspects Fraudulent acts by employees: Professional indemnity policies can include The extension to cover fraudulent or dishonest acts by employees is of importance to the business as it cushions it against financial losses resulting from such acts, which may include among others embezzlement, theft or fraudulent financial reporting. Indeed, some contractual covenants insist on this extension for employee dishonesty . The partners in the case of firms and directors in the case of company are no

Defamation Cover in Professional Indemnity Policy

  Professional indemnity (PI) insurance, otherwise referred to as errors and omissions insurance in businesses, protects professionals and their businesses against negligence, mistakes, and omissions regarding professional services rendered. One such significant area that needs to form part of the PI policies is defamation cover. Defamation cover under a professional indemnity policy offers protection for claims of defamation, whether libel—written defamation—or slander—spoken defamation—that comes out of the professional activities carried out by the insured person. Key points of Defamation Cover under a Professional Indemnity policy 1. Damages: The policy provides indemnity for legal liability for damages awarded to the claimant against whom the insured has been found guilty of defamation. 2. Defense Costs: It includes the cost of defense against claims for defamation, which may be quite high, even in respect of claims that turn out to be groundless or ultimately unsuccessful. 3. Pub

Breach of duty, contract and privacy in Professional Indemnity insurance

The major points of the Professional Indemnity policies in India are related to breach of contract, breach of duty, and privacy concerns. Let us understand the aspects of breach of duty, breach of contract, and breach of privacy in professional indemnity policies. Breach of Contract in PI Insurance 1. Definition: A breach of contract occurs when a party does not fulfill their obligations as stated in the agreement. 2. Coverage: PI insurance typically covers claims arising from professional negligence, errors, or omissions that result in a breach of contract. However, deliberate or intentional breaches are usually not covered. 3. Claims: The insured must claim under the PI insurance that breach of a contract resulted from a professional error or omission. Further, the breach should be attributable to circumstances beyond the control of the parties and justifiable on specific situations of the contracting parties  Breach of Duty in PI Insurance 1. Definition: Negligence is breached duty—

Moratorium period in health insurance policies

    With the cost of health insurance rising consistently every year, a health insurance policy has become mandatory. However, health insurance comes with its own set of terms and conditions and an important feature of this policy is the moratorium period.   Moratorium period is a term in a health insurance policy which indicates the time period where the policyholder will not be covered for any pre-existing illness in spite of having a health insurance policy. This is also known as the waiting period.   Let us look at the moratorium period in more detail in this blog.   How does the moratorium period work?   When you decide to buy a health insurance policy, you will be required to fill a questionnaire by the insurance company where you will have to disclose information about any history of illnesses or medical conditions you may have. If any of your responses fall under the category of pre-existing illness, the insurer will ask you to wait for the duration of the moratorium p