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. Public Apologies and Retractions: In certain cases, the policy may also cover the
expenses incurred by issuing public apologies or retractions as a part of
settlement or court order.
Why Defamation Cover is necessary in PI policy
1. Professional Reputation: Defamation cases cause severe hurt to a
professional`s reputation, which is quite necessary for career and business.
Hence, coverage mitigates this risk.
2. Financial Protection: Defamation case particularly at the Legal defense
and damages can be extremely expensive. PI insurance with defamation
cover protects the policyholder financially against such expenses.
3. Broad Spectrum of Professions: This coverage is most critical to
professions involving public statements or publications – such as a journalist,
media professional, consultant, or even a medical professional publishing
research or providing some public form of commentary.
Examples of Cases of Defamation Claims
1. Media and Journalism: Articles, reports, or broadcasts which unknowingly
cause injury to someone's reputation can lead to libel and slander lawsuits.
2. Consulting and Professional Advice: Reports or advice perceived
which the client or any third party alleges is defamatory.
3. Public Speaking and Presentations: Any statement during conferences,
seminars, or meetings which are alleged to be defamatory in nature.
Limitations and Exclusions in the defamation cover
1. Intentional Acts: The policy does not usually extend to intentional or malicious
defamation. The cover usually applies only to negligent acts or omissions.
2. Jurisdictional Limits: Jurisdictional limits may apply with respect to where
the alleged defamation took place, thereby excluding the coverage.
3. Policy Limits: Most of the time, there are sub-limits under the PI policy for
defamation claims which may be quite different from the total policy limits.
4. Deductibles: The policy may have special deductibles for such claims.
Extending the Defamation Cover under PI policies
1. Bespoke Policies: Professionals may negotiate with insurers to modify their PI
policies to cover defamation suits more comprehensively, according to their risk
profile.
2. Higher Limits: Higher coverage limits can provide more comprehensive protection for major defamation claims.
3. Risk Management Practices: Best practices in communication and documentation can lower potential defamation claims.
Defamation cover under a professional indemnity policy is such vital protection to professionals who may face allegations of defamation in the course of their business practice.
Understanding what the extent and limitations are with this type of coverage can be beneficial in better preparing professionals to manage the risks very well against their reputation and financial stability.
It is best to consult an insurance broker to seek clarification on the implications of the
defamation clause in Professional Indemnity insurance policy.
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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