What’s the difference between errors and omissions and civil liability policy wording?
Errors & Omissions basis of coverage is based on negligence, statutory breaches (such as misleading or deceptive conduct or misrepresentation) and equitable breaches such as breaches of fiduciary duties and breaches of trust. You should, however, read the wording of your policy carefully. Some of these kinds of breaches may be excluded. For instance, while the policy may cover contractual liability, most policies contain contractual liability exclusions in relation to liability that has been assumed by the insured.
Consider also whether the policy covers you for the acts, errors or omissions of your agents, contractors or sub-contractors. Whilst the liability of agents or sub-contractors are typically excluded, some policies do cover, by way of an automatic extension, a professional for liability it bears for professional services for which it is legally responsible. Note, however, that some policies may provide this cover only by way of an optional extension and such cover could also be sub-limited.
It is becoming more common to see ”civil liability” wordings in the PI insurance market. Such policies typically cover the insured for claims arising from their civil liability provided such liability is incurred in the course of performing their professional services. This is broader than one based on negligence or breach of professional duty, in that negligence is not the only basis of coverage and the insured does not have to show that the claim arose out of a breach of professional duty in order to fall within the scope of its insurance policy.
Civil liability, as the name suggests, is liability that arises out of civil law, as opposed to criminal law. Criminal liability or penalties that could be imposed by statutes, for instance, would not fall within this coverage. Civil liability can be said broadly to fall into four categories: (i) tort law such as the law of negligence, nuisance or defamation; (ii) contract law; (iii) statutory obligations such as consumer protection legislation; and (iv) equitable breaches which are based on principles of fairness and justice – including breaches of fiduciary duties or breaches of trust.
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The above-mentioned points are for your consideration and are not intended as legal advice. If you have any questions about the adequacy of your reports in relation to the standards you should seek legal advice.