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PI policy insures legal liability towards third
party in the event of any third party bodily injury
or property damage arising from professional
negligence of the insured.
The policy includes insured's defence costs and
expenses.
This policy is useful for professionals such as
architects, engineers, lawyers, consultants, etc.
Professional
liability arises from the failure to use the degree
of skill expected of a person in a particular field.
Professional liability insurance is insurance
covering liability arising out of providing
professional services to others.
By law,
professionals are required to perform the services
for which they were hired in accordance with the
terms of contract. While the first duty is primarily
contractual, the second arises from the principle of
tort law.
A contractual
arrangement is created, when a client hires a
professional to perform a service. When he fails to
perform the contractual obligations as promised and
the client suffers harm as a result, the injured
party is entitled to be restored to the position he
would have occupied had the contract been performed
as promised.
A professional is
expected to use reasonable care to avoid causing
injury to his clients in the exercise of his duties.
Failure to comply with such accepted standard of
conduct exposes a professional to liability for
damage to another person. A wrongful act is
established by determining whether a prudent person,
while exercising ordinary care, would have foreseen
the injury or damage that would have naturally or
probably resulted from his conduct.
Violation of duty
towards a client by a professional can result in a
contract action, or a tort action, or both. A breach
of contract arises when the professional fails to
perform the services agreed to.
The professional
liability coverage needs of professionals differ
according to the possible consequences of their
professional acts or omissions. Consequently,
professional liability policies differ in the types
of loss they cover. The principal consequence of a
physician’s negligence is physical or psychological
injury to a patient.
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