Professionals are required to discharge their obligations and commitments diligently and befitting with quality and standards of services. The laws of the land mandate that the professionals should provide services to the public in a required manner exercising duty of care and while doing so they should not commit any negligent act.
The term "liability" means responsibility and "legal liability" means responsibilities which can be enforced by law. Legal Liability may be classified into Criminal Liability and Civil Liability. Only Civil Liability claims are payable.
Liability insurance is a part of the general insurance system of risk financing to protect the purchaser (the "insured") from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event he or she is sued for claims that come within the coverage of the insurance policy. Originally, individuals or companies that faced a common peril, formed a group and created a self-help fund out of which to pay compensation should any member incur loss (in other words, a mutual insurance arrangement). The modern system relies on dedicated carriers, usually for-profit, to offer protection against specified perils in consideration of a premium.
Covers all aspects of professional misconduct and the responsibility of professionals to follow codes of conduct when providing care or services in their field. In the event of the failure to adhere to the professional codes of ethics by the service provider a professional liability claim can be filed for, as examples, disclosure of client/provider confidential information and/or negligent actions leading to damages to the client. Most professional associations require that their members be insured against liability claims.
Bolam Vs. Friern Hospital Management Committee 1957] - Bolam Test: Where there is a situation that involves, the use of some special skill or competence the test is the standard of the ordinary skilled person exercising and professing to have that special skill:
“ the test is the standard of the ordinary skilled man exercising and professing to have that special skill. A man need not possess the highest expert skill; it is well established law that it is sufficient if he exercises the ordinary skill of an ordinary competent man exercising that particular art”.
If a person presents himself as an expert, he is expected to show a higher degree of skill than the average member of his profession.
The Professional are required to have certain skills and expertise in their respective fields and are also required to perform services as per the standards of conduct.
So, the Professional is responsible for any negligence or failing to use their required degree of skill. Though everyone tries to satisfy the clients, yet mistakes can happen anytime even if the professional is not at fault. Buying a professional liability insurance policy beforehand can protect from financial losses caused by any lawsuits if the professional is for negligence.
There is no standard wording in use for this form of indemnity. Practice varies among insurers and most insurers have different ‘Standard’ wordings for different professions. The key difference between a PI policy and a public liability policy is that PI policies are ‘claims made’ basis.
“… that subject to the terms, exceptions contained herein or endorsed hereon, the Company will indemnify the insured for their legal liability to pay compensation including defence costs, fees and expenses anywhere in India in accordance with the Indian Law”
The indemnity arises only to claims arising out of losses and/or damages during the period of insurance first made in writing against the insured during the policy period and the insured in indemnified in accordance with the operative clause for any breach of Professional duty by reason of negligence act, error or omission, whenever and wherever committed or alleged to have been committed during the period of insurance by:
The insured as stated in the schedule.
The predecessor in business of the said firm in respect of whom insurance cover is expressly provided in the schedule.
Any person at any time employed by the insured or by such predecessors of any business conducted in their professional capacity.
Every person who enters into a learned profession undertakes to bring to the exercise of it a reasonable degree of care and skill. He does not undertake, if he is an attorney that at all events you shall gain your case, nor does a surgeon undertake that he will perform a cure nor does he undertake to use the highest possible degree of skill. There may be persons who have higher education and greater advantages than he has, but he undertakes to bring a fair, reasonable and competent degree of skill.