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Posted By AlexLey
I was wondering if you have PI Insurance and you were clearly negligent in your work and were fully covered for all loses by your insurance.
1. If you were to lose your case would you then have to pay high premiums on your policy? What this be significantly higher?
2. If you are clearly negligent would the insurance company still push you to fight the claim?
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Posted By Chris Jerman
Alex, you cannot, specifically, insure against negligence.
But if I understand you to mean "Would your mistake ie the effects of your decision, be insured" I would suspect yes to some degree.
In other words if your negligence lead to an injury, the injured party would probably be insured.
Would all losses be covered. No, fines for example are not normally covered by insurance. Would your premium go up? I doubt it - there wouldn't be a premium because no-one would insure you.
Doubtless there will be additional views.
Chris
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Posted By David Bannister
Alex, if a liability claim is made against you and a insurance payout is made, you can expect future premiums to rise by a very significant amount. That's the way the insurance market works. You would be perceived to be a "worse risk" as already having had one against you.
For a very large organisation, it could be that one insignificant claim would not affect the £Million premium that much.
Would the insurers fight it? If there is a defence to be mounted with a reasonable chance of success, then probably. Insurers do not want to pay out when there is no liability.
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Posted By Phil Grace
Alex,
A couple of points here (I work in insurance so get in touch if you want more details)
Regarding Chris's point; Being pedantic you are insuring YOUR negligence but it is not insurance AGAINST negligence.
In very general terms your premium is determined by what you do (including your clients, whether you are advising on CoMAH site or offshore or just providing guidance for SME and also your claims experience.) The whole purpose of insurance is to smooth or share losses so your claim will be considered against claims from other similar consultancies. So whilst your premiums will go up after a claim insurers do not seek to recover what they have paid out for your claim from you over the next couple of years!
Your insurance is designed/purchased to protect you, to pay the claim if you are found to have been negligent. So, by definition if you are negligent then the claim must be paid. An insurer may defend on the basis that there are some mitigating factors (in Employers Liability the injured employee may have been negligent themselves)
You used the term "covered for all losses". The only thing I would say there... yes except for any excess that you may have accepted (think of windscreen excess on motor policies) BUT you need to think about the level of indemnity purchased. If you have purchased £1 million a claim settled for £1.25m leaves you with a bill for £250,000! And it might depend whether legal costs were included.
Hope this helps
Phil
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