Skip to main content

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—the failure to apply the regard for the people that one assumes in a professional capacity, which causes loss or harm to a client or a third party.

2. Coverage: PI insurance covers any claim where the insured is alleged to have been negligent in carrying out his/her duties to the required standard, which results in a financial loss or damage.

3. Claims: To successfully claim for breach of duty, he has to prove that the duty of care had been breached and such breach has caused the loss.

Privacy Issues in PI Insurance

1. Definition: Privacy breaches are considered unauthorized access or disclosure of personal and confidential information.

2. Cover: PI insurance may extend to cover privacy breaches where the nature of the business is particularly sensitive like health, financial,  Information technology, scientific research, etc.

3. Claims : To substantiate a claim on account of breach of privacy, it needs to be proved that the failure of the insured to take adequate care to protect the personal information permitted access or exposure causing damage or loss.

Key Issues for PI Insurance Policies

1. Policy Exclusions:  Known exclusion to the policy includes willful breach, fraud, and criminal acts.

2. Notice Requirements: The insured should report all incidents that may give rise to a claim to the insurer as soon as possible.

3. Legal Support: Many policies provide legal advice and representation in the defense of any claims.

Conclusion

Contractual duties, duty of care, and the need to protect personal data are all issues of which professionals need to be aware in India. PI insurance offers some protection against allegations of negligence or error but an understanding of the scope of coverage and exclusions is paramount.


If you have any more specific questions or need further details on any aspect, feel free to ask us.

We at Zen Insurance Brokers assist in choosing an insurance policy with clauses suited to your requirements. Choose your insurance policy wisely. Get in touch with us for any assistance. 

Disclaimer:

Zen Insurance Brokers is an IRDA  registered broker which facilitates quick and adequate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.

-Hema Gopalakrishnan


 

Comments

Popular posts from this blog

Insurance in a Time of Conflict: The Truth About War Risk Coverage

  In the wake of the recent confrontation between India and Pakistan through Operation Sindoor, a question in the minds of those with an insurance policy was if their policy will cover war-related damages. Our clients were no exception; we got queries on insurance coverage for wars during this period. War seemed a remote possibility until Operation Sindoor, but this operation made everyone believe that war was a reality and prompted the exploration of insurance coverage for such an incident.  In this blog, we will explore the coverage for war in insurance policies. War Coverage in Insurance Policies Most insurance policies—whether for property, auto, life, health, or travel—include a war exclusion clause . This clause denies coverage for losses or damages resulting directly or indirectly from war, invasion, civil unrest, rebellion, insurrection, or military action. Importantly, this exclusion generally applies even if war is not officially declared. Declared Wars: When...

AOG (Act of God) Perils Extension in CGLpolicies

      A OG (Act of God) Perils Extension in Commercial General Liability (CGL) policies refers to the inclusion of natural and unpredictable events under the coverage of the policy. AOG perils are events beyond human control, often caused by natural forces, and their inclusion can significantly broaden the scope of a standard CGL policy. These perils are not covered automatically in a CGL but have to be purchased separately as an add-on. Let us look at this aspect of CGL policies in more detail. Indian firms looking to buy a CGL policy should ideally opt for an AOG perils extension because the country is geographically prone to various natural disasters such as earthquakes, cyclones, and floods. Including AOG perils in a CGL policy will help businesses in disaster -prone areas to protect against liabilities arising from damage or injury caused during such events. AOG Perils covered in a CGL policy Earthquake Floods (including inundation, cloudburst, etc.)...

What Group Health Insurance Doesn't Cover: Key Exclusions You Must Know

  Many employees covered under a group health insurance policy are under the impression that this policy will cover any cost they incur for illness or hospitalization. But the fact is the insurance cover by a group health insurance policy has several exclusions which employees discover much later. Due to these exclusions, an employee who has to undergo medical treatment might not get the required coverage due to exclusions, which can cost him financially and emotionally. Employees need to be aware of what is not covered in a group health insurance policy so that when medical treatment is necessary for them or their family members, they know whether coverage is available or not and they can be in a better position by taking a personal health insurance policy. In this blog, we will focus on exclusions in a group health insurance policy. What are exclusions in group health insurance? Exclusions are conditions or treatments that a group health insurance policy will not cover...