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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


 

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